Many of our clients continue to find real estate a great investment even in today's market.  The key is understanding your level of risk and what you want to acheive.  We help our clients access thier current needs and goals to determine what types of real estate investments to consider.

Types of Real Estate Investments:

Rental Property:
This is one of the most popular ways to invest in real estate and create income. It also mean that you are able to be a landloard are willing to pay another party to manage the property for you.

Equity Builder:
Many clients purchase homes that need work or fixer-uppers with the intent to rehab/enhance the home over time to essentially build thier equity by increasing the home's value over time. This strategy isn't for everyone and can be very disruptive if you are rennovating a home while living in it.

Flipping:
This method got very popular during the escalting values of real estate over the past few years. In this method investors buy a property that needs work, rennovate it and then sell the property for a profit. Most buyers are not willing to or do not want to rennovate a home so this fillls a need in the real estate market. Profits can easily turn to losses when budgets exceed orginal estimates, unexpected changes occur and the investor incurs a long market time to sell the property.
   
Buy and Hold:
This is different than "speculation" which is buying a property during a preconstruction or initial marketing period and then planning to sell the property after construction is complete, assuming the price will increase over that period.

When investors buy and hold, they most often buy vacant land or a primary or secondary residence with the expectation that holding the property over a longer period of time will result in appreciation. 

What is a 1031 Exchange?
IRS code 1031 is a tax deferral strategy that allows taxpayers to reinvest the proceeds from the sale of property held for investment or business purposes into another investment or business property, and defer capital gains tax that would otherwise be due on that initial sale. It can also be referred to as a Starker Trust.

The Exchanger, using a Qualified Intermediary, sells their Relinquished Property to a Buyer. The proceeds from this sale then go towards the purchase of a Replacement Property, again using a Qualified Intermediary.

1031 Exchange Terms:

Relinquished Property: property being sold by investor.

Replacement Property: the new property being purchased with exchange proceeds from relinquished property.

Boot: is a tax liability and comes in many forms including any excess funds, mortgage debt relief not rolled into the transaction.

Constructive Receipt: Direct or indirect use or control of exchange funds.

Like Kind: The definition by the IRS of property types that can be exchanged for one another. For example investment for investment.

Qualified Intermediary: must be used to facilitate the 1031 Exchange Transaction. A 1031 Qualified Intermediary (QI) is an independent and professional facilitator who receives the funds. The QI handles the funds from the original sale and holds the funds until they are needed to purchase the new exchange (replacement) property. The QI then directly delivers the money to the closing agent who then, in turn, delivers the deed directly to the real estate investor himself.