What Type Of Property Should I Choose?

A: There is no right or wrong answer here. What it comes down to is an in-depth analysis of your personal situation (as well as your long and short term goals).

Here are some things to consider:

  • Risk Tolerance and current buying power
  • Current Personal Leverage
  • Personal Usage: long vs. short term occupancy
  • Personal Involvement (Maintenance)
  • Professional Management vs. Managing your own unit(s)
  • Cash Flow vs. Appreciation
  • Leveraging Your Investment
  • Tax Advantages
  • Leveraging Investment Equity: 1031 Exchanges
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What Kind Of Investment Properties Are Available?

A: You will find a wide variety of choices when you are beginning to shop for your investments - such as:

  • Condos and Condotels
  • Villas and Town homes
  • Single Family Homes
  • Lots and Land
  • Existing Construction
  • Pre-construction and new-construction
  • Conversions
  • Fix and Flip
  • Commercial
  • Industrial

Each one of these choices will have it's own unique characteristics as far as: how much money is required for down payment, the likelihood of appreciation, the likelihood of monthly cash flow, etc.

Click here to see the great MN investment opportunities I am currently making available on this site!

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I'm Ready To Invest - What's Next?

A: Once you have decided that you are going to "get in the game" and actually buy and investment property - congratulations! Just reaching this decision alone is a quantum-leap ahead of being like so many others who will only dream of investing - "someday-maybe".

The next step for you now is to meet with your wealth-coach/lender to determine your buying-power. Once you know how much you can afford to buy -  then it's time to look at  investment  opportunities.

If you want to own local MN investment property that you manage yourself (like I do) we can simply start by setting an appointment to look at qualified-properties that make sense for you.

I also own Florida Investment Properties that I present to Minnesota investors because of it's greater potential for appreciation, high occupancy rates, and convenient on site management.

Call me to discuss these options and determine a course of action that's best suited for your investment goals!

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Which Loan-Products Are Right For Me?

A: This is another great question for your personal wealth-coach and/or lender to examine what's right for you.

Consider some of the following loan-products to achieve your investing goals:

  • Fixed
  • Arms
  • Interest Only
  • Option Arms
  • Down Payment
  • Or Zero Down

Contact me if you need assistance in getting in touch with a lender who can support you in choosing a loan product that's best suited for your investing needs.

MN Investment Property

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How Do I "Build Wealth" With Real Estate?

A:  Everyone has their own individual strategy…

My team and I have chosen to model people who have already produced millions by investing in real estate. We look forward to working with you to individualize a plan that will work best for your specific needs. We start by evaluating your current balance-sheet and then how to optimize it to build your wealth. The truly wealthy are conscious-players in the game of wealth-building (and at the source of their own success) - so the more you are willing to learn and do, the more successful you will become.

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Investment Periods of Expansion and Contraction.

One of the things newer investors soon learn is that investing isn’t particularly linear, although it may seem that way at first. There are periods of expansion and contraction.

Most investors start with 1-4 properties, at which point they are out of “cash” on hand and ready to start the next phase. They now will be poised to build equity over time while collecting rents to pay the associated mortgages and bills. Then, usually within 5 years or so, the investor will begin to analyze his/her holdings.

Their next move is best to strategize with their team of experts: brokers, lenders, realtors, coaches, qualified intermediaries, attorneys & specialists…

Here are several possible investment scenarios, based on the time needs of the investor:

1. Refinance some or all mortgages to 15 year mortgages. Purpose: properties are paid off and almost pure cash flow after 15 years – ideal for parents with young children – One property per child = a great college fund.

2. Pay down 2nd mortgages and other debt. Purpose: poise debt to income ratio for more purchases and bump up credit ratings.

3. Refinance 1 or more properties to pull cash out and/or get better interest rates and/or avoid a property moving into more taxable standings. Purpose: for some investors approaching paying in taxes at tax time, insures that mortgage product has sufficient interest to keep income bracket low. This can also be accomplished in any given year by doing significant upgrades.

4. 1031 any properties the investor no longer wants to hold and/or maintain. Purpose: tax defer any gains on the property and reinvest in new (usually multiple) properties with the proceeds.

Real Estate Investors MN

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Will I Have Enough Income To Retire Comfortably?

A: Only your financial planner or wealth-coach can examine that with you.
 
Consider asking yourself what the likelihood is of your current job providing the needed income to become financially independent. You may be surprised to learn how little your current retirement plan actually provides you for retirement income.
 
Fewer than 1 person in a thousand receive the expected level of income at retirement. Unfortunately a good income often lures people into a false sense of security, causing the lack of preparedness for retirement funding. As a result the average age of people retiring continues to climb.
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Do You Recommend Investing In Condos Or Single Family Homes?

The answer is YES to both!

We focus on single-family homes in Minnesota for the following reasons:

            Liquidity: personal residences are quick and easy to sell, if needed

            Higher grade of tenant: more stable, less vagrant, higher quality

            Equity gain over time: long-term appreciation is typically the greatest

            Easiest to acquire financing for

            Easiest to rent out

            No association or management fees: increased cash flow

When investing regionally (in other states) - we focus on condominiums for the following reasons:

            Liquidity: personal residences are quick and easy to sell, if needed

            Lowest price points: easiest to acquire for beginners or multiple units for intermediate investors

            Easiest to acquire financing for

            Lowest down payment requirements: less cash out of pocket

            Strong rental market for affordable prices: high occupancy rates

            Onsite management & association: least personal time invested

If you are considering diversifying your real estate investment-portfolio, you may want to consider both of these options. It's a great way to balance cash flow with appreciation.

Minnesota Investment Properties

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What's The Difference Between Being Rich And Being Wealthy?

A:  There are several ways to look at this question. I’ve chosen to provide you with one of the more popular definitions:

The rich are defined by their jobs. They earn a lot and often spend a lot on their lifestyle. If they lose their job, they soon lose their riches.

Financial wealth can be considered as not related to a job. It's wealth that produces a combination of appreciation and cash flow no matter what type of job you hold, if any. Building wealth, therefore is about gathering un-earned income.

My mission is to support you in using property-ownership as one of the methods for long term wealth building.

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What Is A 1031 Exchange And How Can It Help Me?

Before you sell any investment property - it's important to know about the money-saving value of a 1031 tax exchange.

A:  IRC Section 1031 provides that neither gain nor loss is recognized if property held for investment or productive use in a trade or business is exchanged for property held for investment or productive use in a trade or business.

What that means is when you are ready to sell an investment property, you can use the gain on it to re-invest in “like kind” property(s) without being taxed on the gain if you use a qualified intermediary and follow the 1031 rules.

 Minnesota Investment Property

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Why Choose Me As Your Investment Property Specialist?

Why choose me to help you to invest in Minnesota real estate?

A: As a successful real estate investor myself - I have helped over 100 people to purchase high-quality investment property since 2005. Take a look at a few of my testimonials to hear what people are saying about me.

At your request I will gladly provide you with some references that you may contact at any time - to ask about how their experience has been working with me.

My reputation of the highest level of service available. Also, I never require the exclusive right to represent you (like so many other Realtors do) so you can choose to buy from whomever you like, at any time…

My goal is to help you to *build your wealth* and prepare for retirement by investing in high-quality (and appreciating) investment properties.

…With NO pressure and NO B.S.!

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Why Invest In Minnesota Real Estate Now?

Another Common Question is "Why Invest in Real Estate Now?"

This answer applies to both Minnesota and other states as well.

A: Baby Boomers are just at the leading edge of beginning to retire. Appreciation in popular retirement destinations will typically be favorable. Check with a trusted Realtor for area specifics. Also, there are still very attractive mortgage products available with rates still at an unusual low, allowing you to qualify for more property that the historical average. Lenders also have more flexible guidelines to get you approved.

Also, the population is still growing. With interest rates no longer sinking, many people who would otherwise buy are now back in the area “rental pool”. Lastly, our significant aging population puts a significant amount of seniors back into the rental pool, as they often no longer want to care for a house and yard but still have the disposable income from their retirement plans.

Minnesota Real Estate Investment

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How Much Money Do I Need To Start Investing?

Beginner investors often want to know how much money they need to come up with when starting out…

A:  Typically there is a no risk, refundable deposit to hold your investment. The rescission period will determine exactly how long that period is. Then the actual down payment is typically 5% to 20% and is usually very straightforward as chosen by you and your lender.

If you want to start out with a $150,000 property for example, plan on at least $7,500 down as a good place to start.

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Local Or Remote Investment Properties?

Q: What is the difference between investing in Minnesota versus investing in other states - like Florida for example?

A: The main difference between investment markets is that some are appreciating at a higher rate and some are cash flowing better. Some can have both qualities or even neither.

This is exactly why it’s so important to know what your focus is on and strive for that. If you have a well-educated and experienced Realtor on your side, you’ll be able to target your market quickly and effectively. Keep in mind with the out-of-state investments you will want either on-site management or have knowledge of a reputable and successful management team in that area to use.

Minnesota Investment Property

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Do Minnesota Town Homes Make Good Investment Properties?

A: They can - townhomes are a bit lower in price point than single family homes, but have monthly association dues that balance the monthly out-of-pocket to closer to even. Also, in Minnesota - townhomes are just as easy to get rented as single family homes, but appreciate a bit slower.

In real estate, MN has averaged just over 6% appreciation annually for the last 200 years. If single family homes are the best residential appreciators & condos the least - townhomes are somewhere in the middle.

But we use the exact same strategies & techniques to rent townhomes (as investment property) as we do single family homes - once you do one, you can do the other.

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How Do I Rent My MN Investment Properties Out?

Another common question I answer for Minnesota real estate investors is, "Once I purchase a place, how do I go about getting it rented?"

A: There are actually a lot of facets to that question. If you’d like my free investor's guide-book (which answers this question at length and in detail) you may get a free copy here.

The short answer is:

  1. Get it ready

  2. Get it listed in good local advertising

  3. Get a good lease to use in Minnesoa and

  4. Follow up completely with every inquiry
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What's Typically Involved With Beginning Investing?

Buying investment property in Minnesota is no more or less complicated than buying your own home.

In fact the process is essentially the same. 

1) Pre-qualify: you create more leverage for yourself if the seller knows your financing is read to go.

2) Choose your investment: use the help of your team of experts to advise you on what properties would make a good investment.

3) Make an offer: if you are purchasing in a development, pricing may be pre-determined. But if you are purchasing a single family home, for example, there is some room to bargain. Don’t “low-ball”. Sellers may be insulted and not look at any other offer from you, just based on that.

4) Purchase Agreement: This is just a fancy name for the contract you and the seller will sign, listing out the specific agreements. Here are some common elements:

    - $ amount of deposit/earnest money

    - Specifically states you’re the price & terms of the agreement

    - Proposed financing you have chosen (this is why it’s good to pre-qualify)

    - Rescission period – the amount of time you have to change your mind for any reason. This is different from state to state and varies on the   type of investment property you purchase. For example, for a condo or town home in Minnesota, you have 10 days from the date you receive your “Condo Docs” to withdraw and get your earnest money back. After that, the seller may keep your earnest money.

    - State the intended closing time that you and the seller agree upon.

5) Closing: On this date you will finalize your purchase and officially “take title” to the property. At this time, the balance of your arranged down payment will be due. For example you and your lender agree that putting 10% down is the best option for you and you put 2% down for your earnest money already, you will need to bring a cashiers check for the additional 8% to closing. Your lender will give you the exact amount plus any closing costs you are paying for upfront.

Minnesota Investment Property

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Buffett Bets On Housing (Again) - Article

This is an article about Warren Buffet and real estate investing - that I thought some of you might be interested in reading.
Hey, if it's good enough for Buffet, it's good enough for me.

~ Alex A.

James Altucher, Formula Capital 02.22.07, 9:25 AM ET

Warren Buffett filed the latest update to his holdings recently, and it's always interesting to follow his new additions, the positions he's increasing and the positions he's reducing. Most people consider Buffett a deep value investor in the style of his mentor Benjamin Graham, but this couldn't be further from the truth.

Instead, Buffett is a broad demographic investor. He looks for what he feels are going to be decade-long or even century-long trends and places his bets accordingly. Right at the beginning of the housing boom in the early part of this decade, he was buying more furniture companies, building parts companies and other companies related to the housing boom that was about to occur. Before oil soared past $40 (and on its way to a high of $77), he was buying pipeline companies and other energy companies, particularly when they were all hit as a group by the Enron scandal.

So what is he buying now, and what can we learn from it?

First, he's once again making the bet that housing and construction might be in a medium correction but not a long-term slump.

He added to his USG (nyse: USG), Wells Fargo (nyse: WFC) and US Bancorp (nyse: USB) positions and bought building parts manufacturer Ingersoll-Rand (nyse: IR) as a new position.

Buffett's stake in US Bancorp went from 6.11 million shares as of March 31, 2006, to 23.31 million shares by year-end.

US Bancorp is an interesting case. Many commercial banks have had trouble because of the two-fold problem of a flattening yield curve as well as the slump in housing. The flattening yield curve means the interest paid on bank deposits goes higher and the interest the bank gets from making loans goes lower, reducing the net interest margin. In fact, USB's interest margin declined 32 basis points last quarter compared with the prior quarter. And the decline in housing means in general there are more write-offs of bad loans. Each write-off affects the balance sheet and is added to the losses for the year.

However, Buffett's been buying quality banks since the mid-1960s and it's worth looking at what he's looking at. For one thing, despite the housing slump, USB's write-offs of bad loans actually declined last quarter–even though most banks' write-offs have gone significantly higher. This shows that USB has kept a very high discipline on the credit quality of its loans. USB executives also said that credit quality would not go down over the next year and that write-offs would continue to slide. For one thing, USB has not participated at all in the craze in subprime lending, which is now burning many banks and mortgage real estate investment trusts.

Additionally, USB's return on equity is a massive 23%, compared with the usual 10% for banks. This shows that the integration of smaller bank chains it has acquired is going smoothly and is contributing to reduced costs. Additionally, it shows that the company is not spending too much money on additional services it offers customers to attract deposits.

With the decline in the subprime market and with many subprime lenders going out of business, it makes perfect sense for Buffett to be buying quality lenders like USB and adding to his Wells Fargo purchase.

His new position in Ingersoll-Rand also expresses a belief that he thinks the slowdown in construction is going to reverse itself. Additionally, while the stock might have slumped during the year due to the slowdown in residential construction, it is worth noting that IR is a diversified machinery company, selling its products and services to industrial builders as well as residential ones.

And even with reduced guidance on its last call, the company is trading at just 11 times forward earnings and has a clean balance sheet with $1.6 billion in cash flows–more than sufficient to pay down $2.8 billion in debt.

Buffett is not the only investor who thinks IR is cheap. The company itself is buying back $2 billion of its own shares, a factor that will ultimately drive up its earnings per share. Buffett's new position in IR is small, a tad less than $25 million, and I'm assuming he's legging in while building a much larger position, particularly on any dips.

Buffett's filing also revealed a new position in UnitedHealth Group (nyse: UNH). Buffett takes a long-term view and is not fooled by any minor slump in the company's stock due to the options backdating scandals.

Everything is going in UNH's direction. Revenues and profits are both up by double-digits. The company, meanwhile, trades at a forward price-to-earnings ratio of just 13. The company has over $2.3 billion in net cash, which is more than enough to deal with any troubles from the options scandal. And the company itself is using its cash flow to buy back stock (just like IR); it recently authorized up to $6 billion to use in a share buyback program.

Considering that cash flows will top a record $6 billion this year, UnitedHealth should have no problem quickly maxing out this buyback program. In addition to Buffett, Forbes columnist David Dreman has been a buyer of UNH shares. Dreman has a fund that's up an annualized 19% over the past three years.

Although Buffett likes to say he is a buy-and-hold "forever" type of investor, he does regularly reduce and even sell entire positions outright. Most notably in this filing, he sold off all of his holdings in Target (nyse: TGT)–while maintaining his holding in Wal-Mart Stores (nyse: WMT)–and also reduced his stake in H&R Block (nyse: HRB). The Target sale probably reflects his belief that the U.S. economy could go through a slowdown and that Wal-Mart does better in such periods. The HRB sale also probably reflects a belief that broader demographics (consumers doing their taxes online, for instance) will ultimately hurt HRB's competitive edge.

James Altucher is the author of Trade Like Warren Buffett (Wiley, 2005), a partner at Formula Capital, and founder of Stockpickr.com.

Investment Properties of Minnesota

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Alex On The MN Real Estate Radio Show!

I was a recently invited to be a guest on the MNRealEstate Show to discuss the Florida Investment Properties that I'm currently presenting.

Click here to listen: 5 min.

The investment property I mention in this segment is one of my 7 finalists (out of he hundreds that I researched). I personally drove over 1000 miles across Florida to inspect this property -  and I think it's an absolute winner for building your wealth!

Call me directly at 612-724-3823 (or send an email) if you have any questions about this property - I'm happy to help!

(Bal Harbor at Tampa, Florida)

Minnesota Real Estate Investment

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What Types Of Investment Properties Are Best?

Another question that I am frequently asked by other Minnesota investors is - "What types of investments are best?"

My answer is as follows:

The two factors that make investment properties valuable are:

            1. The cash flow they produce

            2. The appreciation they produce.

There is often a balance reached between these two factors based on immediate versus long term goals.

We typically teach people the "buy and hold method". Whether your investment property is cash flowing or not, it will typically appreciate far more than most any stocks, bonds or mutual funds could ever do.

Choose your focus and choose your investments accordingly. Have your Realtor or representative examine these factors for any investment you purchase. Ask them for their experienced and educated opinion.

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