Mind Your Cash Flow Fundamentals
Whether 2006 real estate prices continue to rise or level off, savvy investors are using proven fundamental strategies to build wealth in the coming year.
Record median prices in November 2005 have extended the success of traditional buy - low - Sell - High tactics despite recent predictions of a more subdued pace. Yet long term investors are applying more stringent criteria to investment purchases these days that even Donald Trump would likely endorse.
Investors are closely examining the potential cash flow of each investment property. Is the probable rental income enough to pay for all the expenses - mortage payment, real property taxes, maintenance fees, gross excise tax and if not, what is the negative cash flow likely to be and is it affordable? The emphasis is on the importance of crunching all the numbers. Is the property in good condition? And if not, can the estimated fix up cost be recaptured?
But aside from the typical investor's mindset to proceed with cautious optimism, there seem to lots of interest and activity in upgrading their investment properties, selling one property to buy two, and buying and holding. And while some speculators are even still buying with the intent of flippin it quickly, more are in it for the long haul.
If you can afford it, owning real estate is a good long term wealth-building strategy. Don't have unrealtistic expectations or expect to make your millions in a year. Think of owning real estate as a long term investment.
1031 EXCHANGE
1031 EXCHANGES
Myth No. 1: The 180 day rule can be extended if Day 180 falls on a weekend or a holiday. Like-kind exchanges must close no later than day 180 after the deed transfer date of the relinquished property. Closing in escrow doesn't count. There must be actual transfer of ownership. The U.S Tax Court has reaffirmed it: If your client's 180 days are up on Sunday, you can't close on Monday: you have to close the preceeding Friday. The no-exception date rule also applies to the 45 days given to identify a property for exchange.
