April 28, 2010
Real Estate Investing | Real Estate Investing – Your Retirement Years Options
Over the years you were engaged in real estate investing and made investments into one or more rental properties; all of which were setting the stage for the retirement years that you now are approaching. As a result, you are now faced with making some decisions about how you want to continue.
In this article, we’ll consider four options commonly taken by other real estate investors who were confronted by the same retirement issues.
1) If early on you approached real estate investing with the plan to manage the financing so that your investments were paid off by the time you retire, and you were indeed successful, then you are undoubtedly in a good position to collect plenty of positive cash flow for your retirement years without further discussion. Of course this isn’t generally the investing method most investors adopt so it’s probably safe to conclude that you will more likely identify with one of the options that follow.
2) You might choose to call your investment career quits and simply sell all of your investment properties. Of course, you will have to settle up with Uncle Sam for the capital gains and cost recovery taxes you owe, but it does enable you to bank the remaining cash so you start devoting your retirement years to more pleasurable endeavors.
3) Another option might be to sell your properties and carry notes against the property; in other words, stop real estate investing and become a banker. This approach might be of interest because it offers two distinct advantages over an outright sale. First, because it would be an installment sale and you won’t have to pay taxes until you receive your profit; and if you carry an interest-only note, you can defer any taxes for the entire term of your contract. Secondly, you will undoubtedly earn a higher interest rate on your money carrying a note than you would if that money were deposited in a bank.
4) Finally, you can opt to keep your properties and turn it into a part-time retirement business, perhaps make it a family business by getting your kids involved, or simply turn it all over to a professional management company and let them carry on all the duties of running the properties and paying the bills while you sit back and collect your monthly check for the profit.
Regardless what method you choose, if you remained diligent to a sound investment plan during those earlier years when you first started real estate investing and paid close attention to the numbers with a sound analysis then your retirement years should give you ample financial freedom to spend your time fishing in the morning and golfing in the afternoon; overall, not a bad life’s work.
About the Author
James Kobzeff is the developer of ProAPOD – leading real estate investor software solutions since 2000. Create cash flow, rates of return, and profitability analysis presentations to evaluate any-size investment opportunity in minutes! Easy and affordable. Learn more at => www.proapod.com
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5 Comments on Real Estate Investing | Real Estate Investing – Your Retirement Years Options »
May 22, 2011
Hector Kane @ 1:36 am:
Real estate investing is probably one of the most prolific careers. Real estate investment is as advantageous and as attractive as investing in the stock market. Real estate industry is reporting highest growth in these days.
June 1, 2011
Finest Real Estate Info » Blog Archive » Recognize the 5 Stages of a True Investing Business – Avoid the … @ 9:41 pm:
[...] profitablepartnerships wrote an interesting post today onRecognize the 5 Stages of a True Investing Business â?? Avoid the …Here’s a quick excerptIt is vital that as you move forward in your real estate investing, you avoid the “burnout and noise” from trying to undertake too many of these other opportunities. What you will notice is that if you put your focus, time, … [...]
June 14, 2011
Jeff @ 2:23 am:
Currently the Real Estate market in Los Angeles has turned towards Development and Investing and for good reason. While banks are still very cautious regarding their lending, they also have some of the best rates available in 30 years! Add to that the increasing number of renters with the discounted price of property and materials, and you have an investing standpoints perfect storm. If you've ever considered real estate investing, now is the time! There likely won't be another opportunity like this in our lifetimes!
September 16, 2011
Simpson G @ 9:03 pm:
Las Vegas real estate isn't going to be increasing in value anytime in the next 5-10 years. If you have the cash burning a hole in your pocket and you know that finding good tenants to rent to is going to be easy, and you don't need to see an increase in property values for a long time, then Las Vegas is great.
Real Estate can be a great investment, if you do it right. If you are going to be mortgaged up to your eyeballs without a property manager and don't know how to run the numbers correctly, it can be a complete nightmare.
Too many people forget to add in things like closing costs, mortgage interest, upkeep, utlities, HOA fees, property taxes, etc, and when they see a $10,000 return without counting all that, they get hooked. Then suddenly they don't understand why they aren't making their mortgage payments and dread that next property tax bill.
September 26, 2011
satarnag @ 12:57 pm:
When a property gets foreclosed on, and it's the first lien holder that is doing the foreclosing, then the second and third and fourth (etc.) will get wiped out at the foreclosure auction. What an investor will do is to buy/tie up the property from the defaulting owner and see if he can discount the first and second. The second will most likely agree to a small amount (usually 7-10 percent) because they will lose everything once the property gets foreclosed on. The first will usually accept a 20 percent hit.
Now what you quoted is that the second note holder was stating that he will own the property by buying it from the person in default and take over the first position's loan payments and make it current. Therefore, he is not interested in selling his note to the investors. The investors in that example were idiots for not controling the property first or the owner didn't want to sell. The investors were hoping to buy the second note at a discount and bid at the auction and own the property with at least 15 k equity plus whatever the homeowner had in equity.
You can buy any note by approaching the lending institution that holds the note and making an offer to buy it. You will need cash to do so.
Also, to clear up the quoted reference, you can purchase property "subject to" existing liens/loans. Taking property "subject to" means that you will take over the payments, but the old owner is still responsible for the loan(s). So if you stop paying the mortgage/trust deed, the lending institution will go after the old owner and start foreclosing on the property. Buying property "subject to" existing loans is one way where someone with no money and/or credit can get into a home and own it. The second note holder was buying the property from the defaulting owner using the "subject to" clause.
I either confused you or helped you. Either way, I just saved you hundreds of dollars in late night real estate infomercials!
E-mail me if you have any questions.
Regards