Real Estate Investor Information
From raw land to multi-unit apartment buildings the FoulgerGroup has sold them all. We will assist you in finding excellent real estate investment opportunities and provide you with the analyses to allow you to make educated decisions. We can also help you find your 1031 exchange property, find a qualified intermediary and bring multiple escrows to a successful close. We can provide contact information for geological, soil, contractor’s, pest control and all other inspections necessary to be fully informed about your investment purchase. We have an international referral network of investment brokers that will provide you with the same superior service you can expect from the FoulgerGroup. If you want to look for a 1031 exchange anywhere in the world give us a call and we’ll put you in touch with an investment broker in any area you are interested in.
Common Real Estate Investment Methods
Flip – “lipstick on a pig” Flipping property is very popular method for many real estate investors. This simple means buying a property, renovating it, and then selling in a short period of time. Usually the goal is to resale in 60 days or less. The best time to execute this strategy is in a raising market and finding properties being sold at 10% to 30% below market value. This is becoming increasing difficult to accomplish. Lenders have been implementing rules to prevent and/or limit investor’s ability to execute flips. We believe property flipping is becoming a thing of the past. Lenders are and will become stricter with the flip rules. Many investors have done very well and many are finding very difficult in today market to be successful.
Buy and Hold Buy and hold is simple holding a property for a set time frame usually 3-7 year and then selling it. This is the great way to invest in resort property or a second home. Real estate goes up in value over time. So you can make a timing mistake and pay too much and still recover, in time. Of course the goal is always to avoid timing mistakes. Which is where we help! Many investors are very successful using this proven real estate investment strategy.
Distressed Distressed properties are those selling at a discount to market. Most, if not all investors buy or at least are looking to buy distressed properties. Bank owned (REO) and HUD foreclosures are a few examples of distressed properties. We can help you find those hard to find distressed properties that can add instant value to your investment portfolio.
Buy Ugly Buying ugly is an interesting concept. There are extreme “buy-ugly” properties. Usually structural, mold or asbestos issues to the point the building with have to be demolished and no one wants to touch it. Well almost no one. There are actually investors that purchase these types of properties. These properties are not for the average investor. You need extensive background in construction and handling issues like mold and asbestos. These properties usually be bought for large discounts to marke, when you find them. You will however have a large amount of money into the property getting it into market condition.
Pre-Leased Many investors purchase a house then look for a tenant. Pre-leasing is where we find a tenant first, then a house that works for both the tenant and you the investor. The pre-qualified tenant is usually a credit challenged individual that wants to own the home at the end of the lease. The lease term is usually two-year with an option to purchase at the end of the lease. This allows the tenant an opportunity to get their credit repaired, so they can qualify for a mortgage. The rental payment is usually set by the purchase price of the house, plus an amount contributed towards the down payment. The advantage to the investor and tenant are as follows:
Advantages to the investor
– Pre-qualified tenant
– A tenant with future potential ownership interest will be more motivated to take care of the property
– No initial vacancy factor between purchasing the property and finding a qualified tenant
– Known investment return before closing the deal
– Usually a high percentage of the tenants never exercise the option. This allows you to re-lease to the same tenant at an increased rent or sell the home at the new current market value
Advantages to the tenant
– Allows tenant to potentially choose their home
– Tenant has potential for future ownership interest
– Tenant has known payment for two years
– Tenant locks in purchase price now
– Gives tenant a chance to reestablish their credit
1031 Tax Exchanges
Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain. How much tax you pay will vary depending on what state you live in and your circumstances, but generally it ranges from 15% to 30%.
Internal Revenue Code Section 1031 offers you the opportunity to defer, or possibly eliminate, this capital gains tax if you exchange the property you are selling for other property. You defer the payment of normally due tax until sometime in the future, and under certain circumstances, you may never pay the tax.
A 1031 Exchange is often called “tax free exchange” because tax is not paid on the transaction. Tax free exchanges have been around since the 1920’s but guidelines have changed throughout history. Details can seem complicated, but with an experienced professional guiding your transactions, you can be assured that your tax-free exchanges are easy, worry-free and most important, safe.
Here are some goals you can accomplish through a 1031 exchange:
Increase Cash FlowExchange 40 acres of non-productive bare land for cash-flow rich mini-storage units.
Ease Your Tax Burden: Exchange your apartment complex for a commercial building with a triple-net lease or perhaps a tenant-in-common type property.
Change location: For example, you might exchange rental houses in California for rental houses in New York. This is usually done when the owner moves and wants his/her investment close by, or wants to move their investments to a better, more dynamic market.
Improve the Quality of Your Investment: You could exchange your 40-year old strip mall for a recently built commercial property.
Turn Your Investment into a Newly Constructed Property: For instance, if you exchanged rental houses for a new apartment complex you have built via a construction exchange.
Diversify: You could exchange a single-tenant commercial building for multiple-tenant duplexes.
“Relocate” Your Vacation Home: Depending on circumstances, you could exchange a vacation home in Jackson Hole, Wyoming for a new vacation home in Aspen, CO.
If structured properly, all of the goals in the above examples can be accomplished without having to pay any tax to the federal or state governments.
Qualifying Real Estate;
Nearly any type of property can qualify for 1031 Exchange, provided it is held for business or investment. Although other types of property qualify, the most common type of property exchanged is real estate. Any real estate property held for business or investment may be exchanged for other business or investment property. For example, you can exchange raw land for an apartment building, a rental house, or a warehouse, and vice versa. However, you cannot trade raw land for a personal residence (it is not considered business or investment real estate) or equipment (it is not considered real estate). The matching of real estate being sold with replacement real estate is generally very flexible under the 1031 rules, as long as the property is used for business or investment purposes.
There are many situations where properties may qualify for a 1031 Exchange. Frequently the opportunity to exchange property goes undetected by the potential exchanger until it is too late. The following list of questions is designed to help you recognize exchange opportunities that you might not be aware of. If you answer yes to any of these questions, you may be a candidate for a 1031 exchange. Call us today and we will put you in contact with a quailified iIntermediary to discuss your individual situation.
– Are you selling real estate used for business or investment purposes?
– Do you plan on buying new business or investment real estate after the sale of the existing property?
– Do you have a significant taxable gain (over $20,000) from the sale?
– Was a significant amount of depreciation taken on the real estate that you are selling?
– Are you aware that depreciation increases the gain on the sale of that property?
– Are you selling business real estate in order to reduce the management headaches related to the current property?
– Do you desire to sell one piece of real estate in order to diversify your investment into numerous pieces of real estate?
– Do you want to construct a new building before you sell your old building?
– Do you realize the gain may be 100% deferred through a properly structured reverse exchange if set up before you begin construction?
– Are you selling a property that has been used as a vacation home?
We have experience working with individual investors, investment clubs and corporations. Our goal is to help them build their real estate investment portfolios by finding them Utah multi-family properties. We can help you find duplexes, triplexes, apartment Investments and other investment properties.
Real Estate Investor Information
by Lynette Foulger
Viist Us on Google+