This document introduces real estate as an investment. It discusses the characteristics of real estate investments, including larger investment sizes and holding periods compared to stocks. It also outlines some advantages, such as cash flow, equity build up, tax benefits, and appreciation. Leverage allows investors to control large assets with less equity. Real estate also acts as an inflation hedge and allows for personal control through renovations. The document then discusses real estate as part of a diversified portfolio.
Real estate is perhaps the smartest investment option open to you today. It offers less risk than playing the stock market, and can provide much higher profitability when done right. Of course, you still need to know how to get started
Introduction to Wealth Management Industry by Miles SoftwareMiles_Software123
This presentation will help you understand the basics of the wealth management industry touching upon the following areas:
What is Wealth Management?
Why there is a need for Wealth Management?
How did Wealth Management Evolve?
Wealth Planning Process
Investment Avenues
Asset Allocation
What is Asset Management?
What is a Fund Management?
How to become a successful Wealth Manager?
Financial planning is for everyone. If you're like most people, financial planning might seem very complicated and confusing, and you might not know where to start. However, here are some ideas to help you get started.
As you may be aware, life expectancy of individuals has increased; which brings with it rise in medical and living costs during old age. Therefore, it is imperative to make provision for expenses wisely. All of us want to maintain our standard of living during our old age as well, but to do so we need to actually start thinking and planning for our retirement right from the beginning of our career when we are young. This ppt aims to help you understand how you can identify and establish your financial goals.
This presentation is made by students of ACPCE - Anamika Mishra, Kirti Karawde, Prathamesh Mahadik, and Ritik Kale.
This presentation introduces the concept of financial literacy to the young generation. It also gives tips on how to go from financially crippled to financially able.
Asian outbound real estate investment was dominated by Chinese investors in 2016, accounting for nearly half of total investment—with 47% or US$28.2 billion—according to latest data compiled by CBRE. Overall outbound investment activity by Asian investors remained robust with institutional investors continuing to lead investment activity, contributing to six of the top ten biggest outbound deals of the year.
Real estate is perhaps the smartest investment option open to you today. It offers less risk than playing the stock market, and can provide much higher profitability when done right. Of course, you still need to know how to get started
Introduction to Wealth Management Industry by Miles SoftwareMiles_Software123
This presentation will help you understand the basics of the wealth management industry touching upon the following areas:
What is Wealth Management?
Why there is a need for Wealth Management?
How did Wealth Management Evolve?
Wealth Planning Process
Investment Avenues
Asset Allocation
What is Asset Management?
What is a Fund Management?
How to become a successful Wealth Manager?
Financial planning is for everyone. If you're like most people, financial planning might seem very complicated and confusing, and you might not know where to start. However, here are some ideas to help you get started.
As you may be aware, life expectancy of individuals has increased; which brings with it rise in medical and living costs during old age. Therefore, it is imperative to make provision for expenses wisely. All of us want to maintain our standard of living during our old age as well, but to do so we need to actually start thinking and planning for our retirement right from the beginning of our career when we are young. This ppt aims to help you understand how you can identify and establish your financial goals.
This presentation is made by students of ACPCE - Anamika Mishra, Kirti Karawde, Prathamesh Mahadik, and Ritik Kale.
This presentation introduces the concept of financial literacy to the young generation. It also gives tips on how to go from financially crippled to financially able.
Asian outbound real estate investment was dominated by Chinese investors in 2016, accounting for nearly half of total investment—with 47% or US$28.2 billion—according to latest data compiled by CBRE. Overall outbound investment activity by Asian investors remained robust with institutional investors continuing to lead investment activity, contributing to six of the top ten biggest outbound deals of the year.
EY Real Estate Asset Investment trend indicator 2014 EY Belgium
The EY Real Estate Asset Investment trend indicator shows increasing interest for Belgian real estate as sound investment in 2014. More findings included.
SSRN Paper: Expected Returns and the Expected Growth in Rents of Commercial R...Bob Lowery
Investigations of whether the cap rate, that is, the rent-price ratio in commercial
real estate incorporates information about future expected real estate returns
and future growth in rents.
If you are considering to expand your business activities in Central and Eastern Europe, Slovakia should be on the top of your destinations list. Thank to its political stability, strategic location, common European currency, competitive taxation system and well-educated and highly skilled workforce Slovakia counts as one of the most attractive country in the region of CEE.
Early Stage Real Estate Tech Investment Thesis (Sept 2016)Earnest Sweat
Here is an example of a personal investment thesis that I created to share with venture capital firms. In this example, I provide my personal perspective on the real estate tech sector. For details on how I build this thesis check out my blog (https://goo.gl/CU4Qid).
Note: Some of the confidential information has been redacted for privacy.
Electronics manufacturing clusters in Eastern Europe: an ultimate guideBalazs Csorjan dr.
Eastern European electronics clusters provide low-cost manufacturing, innovative supply chains and focused manufacturing skills, making easier to do business on the European market.
Implementing an effective Corporate Real Estate Project Framework in global o...jcquinn
Projects vary in type, size and complexity, ranging from new builds and refits, to major interior overhauls and facilities management – and often involve a mixture of these elements.
Raises three key issues:
> How can you keep information up-to-date and available in one place?
> How can you manage workflow and provide the right information to the right people at the right time?
> How can you use a single framework to design the governance processes and life cycles over such a wide range of projects?
Tax advantages to commercial real estate ownership. Also applies to residential ownership in some cases. There are enormous tax advantages to owning commercial property if you know how to set it up properly.
1. INVESTMENT ENVIRONMENT
•Develop a clear understanding of the course contents and
understand the term investment and factors used to differentiate
types of investments
•Be able to explain and describe the investment process and
types of investors
•Discuss the basic types of investment vehicles.
4
2. SECURITIES
•. Identify the different types of securities that investors routinely
buy and sell in financial markets around the world
•Develop a clear understanding of the different classes, InterestBearing Assets, Equities, Derivatives and Option Contracts
Maximize Wealth in Real Estate with Rental PropertiesezLandlordForms
Discover the key to building wealth in real estate through rental properties. Generate passive income, take advantage of tax benefits, and diversify your portfolio with this multifaceted investment strategy. Check out all details by visiting online at https://articles.ezlandlordforms.com/landlord-and-real-estate-news/why-real-estate-is-a-great-way-to-build-wealth/
If you are searching a best Real Estate agent then you should contact leolist vancouver Canada For their services, he is given a commission from their client (buyer, seller or both). When doing work on behalf of the seller, the real estate agent is accountable for putting the property’s details in the different listing services of the specific area and undertaking some other important efforts like home staging to promote the property.
Deepika Ruhil PPT 1_ Investing in_ How to Build Wealth and Financial Security...Halo Homes
Building wealth and financial security is a goal that many individuals aspire to achieve. While there are numerous investment avenues available, real estate has long been recognized as a reliable and lucrative option.
Commercial Real Estate Investment Trusts (REITs) provide investors with an opportunity to invest in a diversified portfolio of income-generating commercial properties. The pros of investing in commercial REITs include diversification, passive income through regular dividends, professional management, liquidity, and access to large-scale properties. However, investors should also consider the cons, such as market volatility, sensitivity to interest rate changes, lack of control over management decisions, tax considerations, and potential concentration risks. It's important for investors to weigh these factors before making investment decisions in commercial REITs.
Real estate investment trusts (REITs) - Overviewhardiklad93
its all about the REITs an overview. Also includes detail of REITs in global market as well as in Indian context.
Also includes advantage & disadvantage of REITs.
Investing in Commercial Property (Series: Real Estate Investing 101 - 2020) Financial Poise
Before taking the plunge into commercial real estate investing, one should have a clear understanding of how to select the right location, preferred type and class of property, what due diligence to do, how to secure financing, how to negotiate a deal, and how to manage the property going forward as a commercial landlord. This Financial Poise panel explains the process from looking for the investment, to contract, to closing, and beyond.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/investing-in-commercial-property-2020/
Commercial real estate investment refers to the process of buying, owning, and managing commercial properties with the goal of generating income and capital appreciation. This type of investment can involve a wide range of property types, including office buildings, retail centers, warehouses, and apartment complexes.
Investors in commercial real estate are typically focused on generating a return on their investment through a combination of rental income, property appreciation, and potential tax benefits. The size of the investment can range from small properties purchased by individual investors to large commercial developments funded by institutional investors and real estate investment trusts (REITs).
One of the main advantages of investing in commercial real estate is the potential for generating stable, long-term cash flow through rental income. This income stream can be enhanced through strategic property management, such as increasing occupancy rates, negotiating favorable lease terms, and improving the property's overall value.
In addition to rental income, commercial real estate investments can appreciate in value over time, providing investors with a potential capital gain when the property is sold. This appreciation can be driven by a variety of factors, including changes in the local real estate market, improvements made to the property, and increased demand for the property type.
Another benefit of commercial real estate investment is the potential for tax benefits. These can include deductions for expenses such as property maintenance, mortgage interest, and property taxes, as well as depreciation deductions that can reduce taxable income.
However, commercial real estate investment also carries risks. These can include economic downturns that reduce demand for commercial space, changes in interest rates that affect financing costs, and unexpected expenses such as property repairs or legal fees.
To mitigate these risks, commercial real estate investors often conduct extensive due diligence before making an investment, including analyzing the property's financial performance, researching the local real estate market, and assessing the property's potential for future growth.
Overall, commercial real estate investment can be a lucrative opportunity for investors seeking to generate long-term income and capital appreciation. With careful planning and management, investors can capitalize on the potential benefits while minimizing the risks associated with this type of investment.
Commercial real estate investment involves buying, owning and managing properties to generate income and capital appreciation. Investors aim to generate a return through rental income, property appreciation and tax benefits. Appreciation can result from various factors, including improvements made to the property and demand for the property ty
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
"𝑩𝑬𝑮𝑼𝑵 𝑾𝑰𝑻𝑯 𝑻𝑱 𝑰𝑺 𝑯𝑨𝑳𝑭 𝑫𝑶𝑵𝑬"
𝐓𝐉 𝐂𝐨𝐦𝐬 (𝐓𝐉 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬) is a professional event agency that includes experts in the event-organizing market in Vietnam, Korea, and ASEAN countries. We provide unlimited types of events from Music concerts, Fan meetings, and Culture festivals to Corporate events, Internal company events, Golf tournaments, MICE events, and Exhibitions.
𝐓𝐉 𝐂𝐨𝐦𝐬 provides unlimited package services including such as Event organizing, Event planning, Event production, Manpower, PR marketing, Design 2D/3D, VIP protocols, Interpreter agency, etc.
Sports events - Golf competitions/billiards competitions/company sports events: dynamic and challenging
⭐ 𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐝 𝐩𝐫𝐨𝐣𝐞𝐜𝐭𝐬:
➢ 2024 BAEKHYUN [Lonsdaleite] IN HO CHI MINH
➢ SUPER JUNIOR-L.S.S. THE SHOW : Th3ee Guys in HO CHI MINH
➢FreenBecky 1st Fan Meeting in Vietnam
➢CHILDREN ART EXHIBITION 2024: BEYOND BARRIERS
➢ WOW K-Music Festival 2023
➢ Winner [CROSS] Tour in HCM
➢ Super Show 9 in HCM with Super Junior
➢ HCMC - Gyeongsangbuk-do Culture and Tourism Festival
➢ Korean Vietnam Partnership - Fair with LG
➢ Korean President visits Samsung Electronics R&D Center
➢ Vietnam Food Expo with Lotte Wellfood
"𝐄𝐯𝐞𝐫𝐲 𝐞𝐯𝐞𝐧𝐭 𝐢𝐬 𝐚 𝐬𝐭𝐨𝐫𝐲, 𝐚 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐣𝐨𝐮𝐫𝐧𝐞𝐲. 𝐖𝐞 𝐚𝐥𝐰𝐚𝐲𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐫𝐭𝐥𝐲 𝐲𝐨𝐮 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐨𝐮𝐫 𝐬𝐭𝐨𝐫𝐢𝐞𝐬."
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
HR recruiter services offer top talents to companies according to their specific needs. They handle all recruitment tasks from job posting to onboarding and help companies concentrate on their business growth. With their expertise and years of experience, they streamline the hiring process and save time and resources for the company.
Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
Know more: https://www.synapseindia.com/technology/mean-stack-development-company.html
Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
Improving profitability for small businessBen Wann
In this comprehensive presentation, we will explore strategies and practical tips for enhancing profitability in small businesses. Tailored to meet the unique challenges faced by small enterprises, this session covers various aspects that directly impact the bottom line. Attendees will learn how to optimize operational efficiency, manage expenses, and increase revenue through innovative marketing and customer engagement techniques.
Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
2. INTRODUCTION TO REAL ESTATE AS AN INVESTMENT
Why do people invest in real estate? Investment motives are
as diverse as the investors who acquire real estate.
3. Overview
1. Characteristics of real estate as an investment.
2. Advantages of real estate ownership and the returns
investment properties offer.
3. Disadvantages of owning real estate.
4. Five investment opportunities for first-time investors
and the advantages and disadvantages of each.
a) Apartment Buildings
b) Condominiums
c) Single-Family Homes
d) Post Offices
e) Syndications
4. CHARACTERISTICS OF REAL ESTATE AS AN INVESTMENT
VEHICLE
• What distinguishes real estate from other investments such as
stocks and bonds?
Investment Size:
1. Securities (stocks and bonds) can usually be purchased with
relatively small amounts of cash ($100).
2. Real estate investments generally require relatively large amounts
of cash, both equity and debt ($100,000+).
5. CHARACTERISTICS OF REAL ESTATE AS AN INVESTMENT
VEHICLE
Holding Period:
1. Securities can usually be purchased and sold relatively quickly.
2. Marketing real estate and the legal requirements of transferring real
property generally involves substantially greater amounts of time.
6. CHARACTERISTICS OF REAL ESTATE AS AN INVESTMENT
VEHICLE
Complexity of Transfer Mechanism:
1. With securities, an investor can usually open an account with a
stockbroker and begin trading very quickly.
2. The purchase, sale, and financing of real estate usually: Involves
numerous legal documents, financial institutions, government regulations,
etc.
3. Requires many other parties to effect a real estate purchase, (e.g.,
appraisers, brokers, insurance salesmen, attorneys, title companies,
escrow companies, etc).
7. CHARACTERISTICS OF REAL ESTATE AS AN INVESTMENT
VEHICLE
No Formal Market Structure For Real Estate:
1. Many securities (and commodities) are traded on organized, centralized
exchanges, such as the New York Stock Exchange.
2. There are numerous large brokerage houses organized to aid in the
purchase and sale of such securities.
3. Similar institutionalized exchanges and large national brokerage houses do
not exist to facilitate the sale or exchange of real estate.
4. Real estate purchases and sales are usually handled on an individual
basis.
8. CHARACTERISTICS OF REAL ESTATE AS AN INVESTMENT
VEHICLE
Absence of Standardized Performance Information:
1. With respect to securities investments there are:
a. Numerous statistics and averages kept with respect to their performance
(P/E ratios, Price to Book, etc.).
b. There are hundred of widely circulated, publications (i.e., Wall Street
Journal) reporting information relevant to making such investments.
2. Information about real estate and the performance of such investments is
more difficult to obtain and generally reported on a less standardized and
more irregular basis.
9. CHARACTERISTICS OF REAL ESTATE AS AN INVESTMENT
VEHICLE
Uniqueness of Each Parcel of Real Estate:
1. Each parcel of real estate is situated in a different location.
2. The “uniqueness” in location makes reliance on quantitative data
(income and expenses) alone insufficient ‑‑ investors who buy real estate
have to physically inspect the property.
10. CHARACTERISTICS OF REAL ESTATE AS AN INVESTMENT
VEHICLE
Entrepreneurial Potential:
1. Once the purchase of securities (stocks and bonds) is made, the
securities investor remains relatively passive.
2. The real estate investor need not remain passive and can initiate activities
with respect to the investment such as renovation, subdivisions, rezoning,
implementation of new management and marketing plans, etc.
11. REAL ESTATE ADVANTAGES AND RETURNS
• What are the advantages of owning
commercial real estate?
12. REAL ESTATE ADVANTAGES AND RETURNS
Profit/Return (An investment in income‑producing property can produce
the following four returns):
1. Cash flow ‑ the cash available from operations after all cash expenditures
of every kind have been disbursed (other than income taxes), including
payments on the loan encumbering the property.
2. Equity build‑up - increases in equity ownership as a result of loan
amortization (i.e., principal reduction).
a. Equity buildup is not a spendable component of return.
b. When the property is sold, the investor owes less on the loan, thus
receiving more cash at closing.
3. Tax shelter ‑ tax losses which can be applied to shelter income from the
property and also from other sources as well.
4. Appreciation ‑ refers to an increase in the value of the property over time.
a. Some of the increase in the property's value may be due to inflation.
b. Some of the increase may result from changes in the supply and demand
forces in the real estate market.
13. REAL ESTATE ADVANTAGES AND RETURNS
Leverage:
1. One of the major attractions of real estate is the investor's ability to
control a large asset with a relatively small amount of equity capital.
2. Investments in real estate are generally made with the use of a
considerable amount of borrowed funds (OPM) ‑ referred to as
“leveraging”.
3. If the return on total capital invested (equity and debt) is greater
than the cost of the borrowed capital, the ability to leverage the
investment gives the investor additional return on his/her invested
capital ("equity") that would not otherwise be possible. Otherwise
known as positive leverage.
14. EXAMPLE OF LEVERAGE
A B
• Purchase all cash • Purchase with 20%
(100% down) at down ($40,000) at
$200,000 price: $200,000 price:
• 10% appreciation = • 10% appreciation =
$20,000 return on $20,000 return on
$200,000 investment $40,000 investment
or 10% yield or 50% yield
15. REAL ESTATE ADVANTAGES AND RETURNS
Inflation Hedge:
1. Historically, real estate has been a good inflation hedge. During
inflationary periods hard assets like commodities, gold, oil, rare art, and
real estate tend to appreciate. Moreover, rental rates rise as well because
economy is usually booming.
2. Also, it has been quite common for commercial real estate leases to
include escalation clauses permitting the pass‑through of increased costs
and increasing rents as the Consumer Price Index increases.
16. REAL ESTATE ADVANTAGES AND RETURNS
Personal Control (or Responsiveness to Entrepreneurial Efforts)
1. Real estate can be improved and renovated by the owner's labor and
capital inputs causing and rents and sales prices to go higher.
2. Examples ‑‑ purchasing and restoring “fixer‑uppers” or converting existing
properties, such as an apartment building, to new uses such as
condominiums. (See Next Slide)
19. REAL ESTATE ADVANTAGES AND RETURNS
Self‑Use and Occupancy:
1. Investors can acquire real estate for their own use.
Examples:
a. A single‑family dwelling is a form of investment that provides physical
shelter, a tax shelter, and appreciation in property value. The ownership
and occupation of a duplex, triplex, etc.
b. An investor‑occupant of a manufacturing plant benefits in a similar
way. Medical doctors and dentists often prefer to own facilities designed
to meet their particular needs.
20. REAL ESTATE ADVANTAGES AND RETURNS
Diversification (Real Estate as a Portfolio Asset):
1. An investors risk of loss can be reduced by diversification into
investments with different financial characteristics.
2. Real estate should be part of a balanced investment portfolio, which can
also consists of stocks, bonds, mutual funds, IRA’s and cash.
3. This can help offset the losses incurred because when one asset
category is declining, another is often appreciating. (i.e., in the year 2000
the Nasdaq 100 fell nearly 50%, the S&P 500 fell nearly 20%, but real
estate investments appreciated on average approximately 25%).
21. REAL ESTATE ADVANTAGES AND RETURNS
Income Tax Factors:
1. Depreciation
a. The investor can shelter a substantial portion of he property’s income
from income taxes.
b. For example, if an investor buys a $500,000 apartment building which
consists of 60% building and 40% land he/she can shield $500,000 x 60% ÷
27.5 years = $10,909 each year from his/her income tax. In other words, if
the aforementioned property generated $10,900 in annual cash flow, the
investor would pay no income taxes on this money.
2. Interest on mortgages and property taxes
a. The major out‑of‑pocket costs to carry real estate (whether improved or
unimproved) are deductible.
b. These costs include: interest, taxes, insurance, and management fees.
22. REAL ESTATE ADVANTAGES AND RETURNS
Income Tax Factors (continued)
3. Expensing maintenance and repairs.
a. The owners of investment real estate can deduct all costs for repairs,
operations and maintenance to keep the property in sound condition.
4. Tenant Improvements (T.I.’s)
a. If the tenant spends its own money to fix up or improve your property,
those improvements made by the tenant do not constitute income to the
owner unless the improvements are intended to reduce the rental rate.
b. This allows the owner another means of increasing the property’s
value when these tenant improvements revert to the owner upon
termination of the lease. The owner may thus realize an increase in net
worth at no tax cost.
5. Flexibility of title and ownership ‑ title to real estate can be held in a
number of different ways (corporations, partnerships, LLC’s), depending
upon the intent of the parties and their tax objectives.
23. REAL ESTATE ADVANTAGES AND RETURNS
Income Tax Factors (continued)
6. Tax‑deferred exchanges.
a. Section 1031 of the U.S. Tax Code allows real estate investors to
exchange equity from one real estate investment to another and defer any
capital gains, which would have been recognized in a normal sale.
b. A 1031 exchange enables (and often times, encourages) the real estate
owner to trade his/her equity in a property for equity in a more expensive
(and greater cash-flowing) property at no current tax cost.
7. Installment Sale
a. When selling a property, the owner/seller may carry a note secured by a
deed of trust from the buyer, which is payable over a number of years. This
note becomes an annuity for the seller. Capital gain taxes are also
deferred until the note’s principal is paid in full.
8. Refinancing
a. An owner may refinance a property and generate cash tax-free.
25. REAL ESTATE DISADVANTAGES AND RISKS
Lack of Liquidity:
1. Real Estate is generally not considered to be liquid. Liquidity is the
ability to convert an investment into cash quickly and with little, if
any, loss of principal.
a. The product is not standardized or traded on an exchange –
time is required for a prospective buyer to inspect and evaluate a
property.
b. Time is required to expose and advertise the property,
negotiate the sale, obtain title search, arrange financing, and close
escrow.
2. Refinancing ‑ Financing may not always be available. Higher
interest rates may make refinancing less feasible.
26. REAL ESTATE DISADVANTAGES AND RISKS
Necessity of Management:
1. In general, most income‑producing properties require a significant amount
of personal attention compared with other types of investments.
2. Whether the property is managed by the owner or through a management
company, constant attention must be given to the property to maintain its
income and value.
3. Many investors find property management an unpalatable aspect of real
estate investment.
27. REAL ESTATE DISADVANTAGES AND RISKS
Lack of Information:
1. The information essential to good investment decisions is usually
imprecise, hard to find, and likely to be inaccurate.
2. Investment decisions are often made with inadequate data and are many
times based on “gut feels”
28. REAL ESTATE DISADVANTAGES AND RISKS
Legal Complexity:
1. The contracts between parties (e.g., buyer‑seller, borrower‑lender, etc.)
are usually complex (and often require expert opinions from attorneys,
consultants and brokers), making it costly to buy and sell properties.
2. The tax laws that impact real estate are also complex and change
frequently and unpredictably.
29. So, what are some options for first-time investors looking
to invest in real estate?
1. Multi-Family Investments
2. Condo Investments
3. Single-family homes
4. Post Offices
5. Syndications
31. MULTI-FAMILY INVESTMENTS
Advantages:
1. Good leverage ‑ generally higher loan‑to‑value loans available (compared
to office & retail properties); seller carried financing is possible.
2. Tax shelter ‑‑ shorter depreciation period (27.5 years vs. 39 years); usually
lower land/building ratio – so more to depreciate.
3. Generally good resale market ‑ may vary, depending on location, number of
units, etc.
4. Less sophistication required in operating the property as compared to
commercial properties.
5. Broad rental market.
6. Greater variety in sizes (2 units to 1,000+ units).
7. Responsiveness to entrepreneurial efforts ‑ short-term aggressive
management can have a significant effect.
8. Rents are generally not controlled by long‑term leases (disadvantage in
down market, advantage in up market).
32. MULTI-FAMILY INVESTMENTS
Disadvantages:
1. Relatively low annual operating cash flow potential (initially).
2. Larger down payments are required in more desirable locations.
3. Higher demands for management time.
4. No security of long‑term leases.
5. No automatic rental increases tied to C.P.I., etc.
6. Expenses not passed through to tenants contractually.
7. Master metered buildings can be nightmares. Also beware of
properties with galvanized plumbing, “brickers”, and flat roofs.
8. Greater exposure to government regulations, e.g., rent control,
code enforcement, etc.
9. Eviction process can be uncomfortable.
34. CONDO INVESTMENTS
Advantages:
• Most affordable of all investment opportunities.
• Great leverage ‑ can finance with as little as 0% to 20% down
(depending on your credit); seller carried financing is common.
• Typically much more liquid than apartment buildings (they sell
extremely quickly in a hot market).
• Less sophistication required in operating the property.
• Renters usually find these more appealing than apartment units (so
easier to rent).
• Greater variety in sizes (bachelor units to 4 bedroom units)
• Rents are generally not subject to rent control.
• Easy to manage (homeowner’s association usually handles most or
all maintenance issues).
35. CONDO INVESTMENTS
Disadvantages:
• Expect little to no cash flow for the first few years of ownership.
• Usually appreciation is less than houses.
• Monthly HOA fees are not tax deductible and eat into your cash
flow.
• You are at the mercy of the Home Owner’s Association (HOA) –
they can raise monthly fees without your approval or impose
improvement assessments.
• HOA may not allow tenants (or restrict the number of renters
allowed in the building).
• No diversification or continuation of cash flow upon vacancy (if
tenant leaves, you have no income).
• Difficult to sell in “buyers” market.
37. SINGLE-FAMILY HOME INVESTMENTS
Advantages:
• Typically enjoy the greatest appreciation in value.
• Often tenants are family and, thus, more stable and remain
longer.
• Great leverage ‑ can finance with as little as 0% to 20% down
(depending on your credit); seller carried financing is common.
• Most liquid of all property types depending on price, area, and
condition. Generally good resale market ‑ may vary, depending on
location, real estate cycle, amenities, etc.
• Much more favorable capital gains “avoidance” than commercial
properties (up to $500,000 for primary residences).
• Relatively easy to manage.
• Good variety of styles and sizes (2 bedrooms and up).
• Rents are generally not subject to rent control.
38. SINGLE-FAMILY HOME INVESTMENTS
Disadvantages:
• Expect negative to little cash flow for the first
few years of ownership.
• Houses with deferred maintenance can be
costly to operate.
• Be prepared for the house to endure excessive
wear and tear. Thus, it may require significant
renovations should you plan to live there one
day.
40. POST OFFICES
Advantages:
• Government tenant – one of the safest and most reliable
tenants in the country. Rents are paid via direct deposit.
• Tenant typically remains in same location.
• Leases run 5 years and include all expenses (except
roof). Known as a NNN lease.
• Prices start as low as $30,000.
• Because of quality of tenant and lease, post offices can
be purchased almost anywhere in the country (so
investors have many from which to choose).
• Generally sell for 7 to 8 capitalization rates so returns are
good compared to apartment buildings.
42. POST OFFICES
Disadvantages:
• The United States Post Office is a bureaucracy. They are often
impossible to negotiate with.
• Post office will typically not sign a lease longer than 5 years
(although they may renew numerous times).
• Little to no financing is available because lenders will only lend
against future income streams.
• If tenant vacates there are few alternatives for the property.
• Appreciates less than residential investment property because
increases in value come primarily from rises in net income (and
not compressions in capitalization rate).
• Inexpensive post offices are not exactly “Pride of Ownership”
investments.
43. SYNDICATIONS
What is a Syndication?
• A syndication is a group of individuals who pool their capital to make
an investment.
• A real estate syndicate is organized to acquire a property that
produces income or a parcel of raw land on which an income
property can be developed.
• They can be created by a group of first-time investors looking to buy
a larger property than the individual members can afford on their
own (i.e., investment clubs).
• More commonly they are created by professional investors (seeking
to earn a profit) who raise capital through first time as well as
experienced investors.
44. ADVANTAGES OF SYNDICATIONS
1. Easiest way to invest in commercial property.
2. Initial required investments are as little as $10,000.
3. Investor receive same benefits as sole investors (i.e.,
cash flow, depreciation, appreciation, etc.)
4. Because money is pooled, syndicator typically buys
larger, more quality, less risky investments in prime
locations.
5. Most sydnicators are professional investors and
managers.
6. Properties are managed by syndicator so no
management is required.
7. Syndicators can invest out of state where returns are
more auspicious than southern California.
45. DISADVANTAGES OF SYNDICATIONS
1. Investor has little to no say in the operation of the
property.
2. Cost of syndication: syndicators charge a fee for their
services, which can dilute the investor’s overall return.
3. Syndicators sometimes manage and sell the properties
they syndicate, which can create a conflict of interest.
4. Lack of liquidity.
5. Potential for abuse: an unscrupulous or desperate
syndicator may divert partnership funds to personal
use.