Real Estate Investment
Today, real estate investment is a hot topic. Everyone is wondering if they should buy, sell or trade. Recently, there has been considerable talk about people who are trading their homes. With the lack of qualified buyers and decline in housing prices, investors are discovering it is sometimes easier to trade like-kind properties.
Trading a like-kind real estate investment is known as 1031 exchange. This type of transaction allows property owners to exchange investment properties while deferring capital gains and depreciation recapture taxes
In order to participate in 1031 exchanges, investors must hire a Qualified Intermediary (QI) to handle the transaction and adhere to guidelines set forth in Section 1031 of the Internal Revenue Code.
The beauty of 1031 exchanges is they can be used to exchange all types of investment property including equipment, boats and airplanes. Houses used as a personal residence or vacation home cannot be traded using 1031 exchanges unless the property is rented out.
Distressed properties are a quickly becoming a popular real estate investment. Distressed properties refer to real estate which is in foreclosure, owned by the bank, or abandoned. Most of these properties require considerable repairs to return them to livable condition. They can usually be purchased below market value either through foreclosure auctions, directly from the bank, or government sales.
Oftentimes, investors purchase foreclosure and bank owned homes for the purpose of house flipping. Perhaps you have seen the television shows depicting real estate investors who purchase rundown houses; make repairs and renovations; then sell the homes for thousands of dollars in profit.
Although house flipping can be a profitable real estate investment it is not for the faint of heart. More often than not, once investors embark on renovations they soon discover simple repairs turn into major expenses. Not to mention there are contractors to hire, permits to be acquired and inspections to be conducted.
A lesser known real estate investment is that of probate properties. When a person dies everything they own is transferred to probate. Their estate is responsible for the continuation of mortgage payments, maintenance, property taxes, and insurance. When estates do not possess the financial means to maintain the home, a probate judge may order the estate administrator to sell the real estate.
Probate properties can a profitable gem; however, locating them requires a bit of detective work. Investors will need to visit the court house where probate matters are handled. They must review probate records to locate distressed properties, than contact the probate executor.
These are but a few real estate investment opportunities. I invite you to peruse our real estate investing article library to discover more about the exciting and profitable world of investing. Although the media is projecting gloom and doom, the real estate market will eventually rebound. Those who invest now can potentially reap massive profits later.