Tag: United States

Buying properties that involves owning a home and moving ahead of the property ladder is probably the most exciting means to ensure financial stability. There isn’t any other investment today that could offer both stability and excellent returns than that of property investment. Even though the stock market could provide high returns, it is an unstable place that could decline anytime, especially now that it is apparently underperforming. As such, many people are now turning toward property investment and considering it as the best investment vehicle that could brought about long term financial wealth.

Owning an investment property overseas has become popular than ever. As a matter of fact, many people today are cashing on in properties that would serve as getaway havens for their families, rental spaces that could help earn good returns, or an investment that they could acquire capital gains from in the future. There are many reasons why it pays to have a property investment abroad. First, you have the chance to experience reduced taxation by having your property rented and of course have a stable income out of it; second, you and your family could enjoy several weeks of vacation especially if you have several properties in different foreign locations; and of course, there are more chances for the price of your property to increase overtime, which you could take advantage of and have it up for higher resale value.

Now that you’re familiar with some of the benefits that you could gain from owning an investment property overseas, it is more likely that you would like to have your property investment started. There are many places that offer good property investment opportunities and one of the most promising today is in Guam. Guam is an island territory of the US that is located at the crossroads of Asia-Pacific countries like Korea, Japan, China, Hong Kong and Philippines. It is an island of regional economic hub because of its location, modern telecommunication and developed infrastructures.

During 2005, the governments of United States of America and Japan announced that the 8,000 marines serving in Okinawa would be relocated in Guam by 2010. Such event requires $10 billion of new construction and procurement of infrastructures that would support the expected growth of people in the island. As such, many investors from Asia, United States and other nearby countries realized the potentials of Guam in becoming one of the major destinations for investment property overseas. Accordingly, the island of Guam is now experiencing an increased rate of expansion in the field of property ownership.

Tumon of the Tamuning district is one of the best places where one could own a property in Guam since it is the island’s economic and tourist center. Tumon Guam presents several major advantages for investors, individuals and families who wish to have their properties in this location. As it is the major hub of the island, it is here where notable high rise hotels, souvenir shops, malls, and upscale boutiques can be found, making it a premier shopping destination for many foreigners as well as local citizens. It is also regarded as one of the areas in the island that has the best greenery and beaches that are all wildlife preserved.

In terms of financial services, Tumon has a full range of services that includes collections, letter credits, money transfers, automated tellers, money markets, and commercial and residential estate loans among others. Tumon also has a very competitive education, transportation and business outlook that could be credited to its US standard adherent infrastructures and information technology. Likewise, communities are well secured as seen from military presence and political stability. Apparently, Tumon Guam is indeed a good property investment location for both investors and homeowners.

This year, investment in the stock market is making many downright jittery. Though overall the stock market does seem to be hovering around the 10,000 mark, many investors are plagued with uncertainty about short and long term investments in the stock market. Will stocks go up or down this week? Is now to time to keep money in the market? Or take money out of the stock market?

As a real estate professional, I always advise people to continue to invest in property. With so many bank owned properties flooding many different markets, real estate investors are actively purchasing homes and investment properties and obtaining some great deals right now.

John Starke, an Investment Advisor and Financial Principle with American Beacon Partners, says that many investors have grown tired of the risk involved in purchasing equities, mutual funds, and other types of investments. Prior to the sharp downturn in the market in 2008, investors goals were to accrue money through appreciation. “Rather than nervously watch their portfolios go up and down, investors want a more stable income,” noted Starke. He sees a rise in interest in Real Estate Investment Trusts (REITs), Tax Free and Corporate Bonds, and even some Corporate CDs. “Many investors are pulling their money from equities and mutual funds and opting for investments that pay a decent, regular return on their money,” said Starke.

In my everyday real estate transactions, I see investors pulling large sums of money from the stock market and putting it into the purchase of homes and properties in Virginia. I have taken the time to ask real estate investors their opinion about stock market investments. Many have decided that the stock market is not for them right now. One investor, J. D., purchased a property in King William County, Virginia that was in foreclosure for $90,000. She will spend approximately $4,000 to prepare the property for the rental market and be able to collect a monthly income of $1,000 from her investment. J.D. told me “I feel the time is right to start investing in real estate again. I stopped four years ago when property prices got out of hand. I intend to do even more real estate investment now.”

Another client, who plans to retire in a few years, is selling one commercial property investment in order to purchase a strip mall in the Western Virginia town where he plans to retire. He will pay the purchase price and invest approximately $40,000 into the strip mall to prepare it for the commercial rental market. He told me, “I am tired of having a business that I have to work at everyday. I want to have an investment that will work for me as I am planning to retire in about two years.” His upcoming shift in lifestyle is motivation for his new commercial property investment. Note that hes not selling one business and putting the money into the market. This may have been the trend for a retiree five years ago but not in the new economy.

Finally, H.G. in Hampton, Virginia made a wise move with money he once had in the stock market. He purchased a condominium for $50,000, invested $2,500 in the property renovations, and is now receiving $850 per month in rental income for the unit. HG said, “I am making more of a return from my property investment than I would in the stock market, and I also receive a tax deduction to boot.”

There are of course risks in real estate investments. A tenant could default on the rental agreement, or a property could remain vacant for months on end. That is why it is imperative that real estate investors hire experienced and knowledgeable property managers to maximize their investment. All of the property investors mentioned in this article are using my property management services for their real estate investments. Other risks include unforeseen maintenance and repair issues. This is why it is important for property investors to put a portion of their profits aside to reinvest in the home, condominium or townhouse they purchase.

Where property investment is concerned, even these risks, when anticipated and well-planned for, are small compared to the uncertainty of stock investments.

Shawn Tully, Senior Editor at Large for Fortune magazine, published “2010’s Coming Stock Market Crash: 1987 all Over Again” in May 2010. He states that stocks are still overpriced. He predicts a low return on investment (or a loss) as an inevitable outcome of this scenario. Tully bolsters his opinion with these astute observations: “Here’s how I see the odds. The chances are about one in three that we suffer a huge, wrenching correction in the next year or two similar to the one in 1987. That possibility is so high because stocks are so startlingly expensive. Another high probability event is that markets go on a long sideways grind, with smaller drops along the way. What’s extremely unlikely is that the market rises substantially from current levels and stays there for any extended period.”

Experts within the financial industry may be reluctant to put forth the strong opinion that Tully articulates. Still, there is no denying that investors have undergone a major shift in perspective since the financial crisis of late 2008 culminated in a recession, took hold of the United States and spread to other countries.

People will always need a place to live. With more and more families sadly experiencing foreclosure and dislocation, renting will be their most likely option. More rental properties will be necessary to fulfill housing demands. Investors need to take a serious look at property investment in their areas, and take steps to purchase viable homes even if they are in need of some repair or upgrades.

Visit http://VonCannonRealEstate.com to view potential investment property listings in Virginia in Williamsburg, Hampton, Newport News, Yorktown, Richmond and Northern Neck areas such as Matthews, Northumberland and King and Queen Counties.

India is the third most attractive foreign direct investment destination in the world, behind China as number one and the United States as number two. In 2008, India was ranked number two but slipped to the number three spot given the economic downturn and the surge of investments by Chinese and Indian firms acquiring American companies.

According to Indias Department of Industrial Policy and Promotion, despite the global recession and liquidity crunch, the Indian economy recorded an 11 percent increase in FDI in 2008-09, with sectors like chemicals and telecommunication experiencing robust growth of 227 percent and 103 percent respectively.

India received approximately US$25 billion worth of FDI in 2007-2008; that number increased to US$27 billion in 2008-2009, highlighting Indias ability to remain resilient and attract investment despite the global slowdown. While no target has been fixed for the financial year 2009-10, so far FDI inflows for April and May 2009 have surpassed US$4.4 billion.

FDI policy and regulations
The Department of Industrial Policy and Promotion provides official information about Indias FDI policy and procedures. Overall, among the emerging economies, India has one of the most liberal and transparent policies on foreign investment. Foreign investment up to 100 percent is allowed under the automatic route in all activities and sectors except the following, which require prior approval of the government:

Sectors prohibited for FDI
Activities and items that require an industrial license
Proposals in which the foreign collaborator has an existing financial/technical collaboration in India in the same field
Proposals for acquisitions of shares in an existing Indian company in the financial service sector and where Securities and Exchange Board of India (substantial acquisition of shares and takeovers) regulations, 1997 is attracted
All proposals falling outside notified sectoral policy/CAPS under sectors in which FDI is not permitted

According to the International Trade and Development Division of the Indian government, the countrys foreign trade policies have been formulated with a view to invite and encourage FDI. The Reserve Bank of India (RBI) manages the administrative and compliance aspects of FDI. Foreign investment can be divided into two broad categories: investment under the automatic route and investment through prior approval of government.

What is an E-2 visa?
An E2 Investor Visa allows individuals to work in the United States based on investments they will control. This visa has to be renewed every second year, but there is no statutory limit on the number of renewals. Investment amounts must be “substantial” enough that the investor is “contributing” to the U.S. economy. These investor visas are only available to residents of “treaty nations.”

The minimum dollar amount of the investment requirement is typically $200,000, although lower amounts have been approved. The government uses an “Inverted Sliding Scale” for assessing whether or not the investment is “substantial” vis-a-vis the total cost of the enterprise in a specific industry. Invested funds must be spent exclusively on the business. Accompanying relatives are also eligible to stay, but not work, in the U.S.

For whom is the E-2 visa most suitable?

Foreign investors who do not wish to become permanent residents or citizens may prefer this option rather than the EB-5 programs. Since its short renewal periods are an added expense, additional costs will be incurred if it is renewed multiple times.

What happens when the qualifying business closes or investment terminates?

The E-2 program bestows non-immigrant status only. When the qualifying business closes or the investment terminates, the non-immigrant status granted with the E-2 visa does, as well. The foreign investor must then leave the U.S. unless some other visa category is approved.

What is an EB-5 visa?

Created by the Immigration Act of 1990, the EB-5 Visa for Immigrant Investors provides a method of obtaining residence (a “green card”) for foreign nationals investing money in the United States. Foreign investors who are funding a new or existing business, investing a minimum of $1 million, creating at least 10 jobs and playing an active role in management should opt for a traditional EB-5 visa.

Who can obtain an EB-5 visa?

An EB-5 visa is suitable for foreign nationals of all ages, professions and ambitions. Business professionals, corporate executives, entrepreneurs and inventors are all natural candidates for the EB-5 visa. Parents who wish to give their children the benefit of an education in the United States, as well as people seeking a better life and/or hoping to retire in America, are also prime candidates.

What is the EB-5 Regional Center Program?

An EB-5 pilot program, created by Congress in 1992 and soon christened the “EB-5 Regional Center Program,” reduces the minimum investment to $500,000 if it is directed to particular Regional Centers in economically depressed areas. Investors in this program are not required to manage the business day-to-day. For all EB-5 visa holders, if the business fulfills the job creation quota, an “unconditional” (permanent green card) is issued after the second year, allowing the visa holder and family members to reside in the U.S. permanently.

How many foreign investors can obtain visas annually under the EB-5 Regional Center Program?

An important advantage to investing in designated “Regional Centers” is that 3,000 green cards are set aside each year specifically for this program. With a specified number of program slots each year, there are neither excessive waiting periods nor “backlogs” as there are with other green card options.

Is business experience or minimum education required?

No.

Must applicants speak English or obtain a sponsor for an E-2 or EB-5 visa?

The answer is “No” to both questions. Although speaking English is a distinct advantage, there is no language proficiency test involved, and no sponsorship requirement.

Who in the applicant’s family receives a Green Card if an investor visa application is approved?

The foreign investor’s spouse and unmarried children, less than 21 years of age at the time the application is made, receive their cards at the same time as the applicant.

Can the applicant’s children remain in school in the U.S. if the applicant leaves the U.S.?

Yes.

What makes the EB-5 Regional Center Program different from the L-1 (manager transfer) program?

Like the E-2, the L-1 is a non-immigrant classification, in this case for multinational executives or managers rather than investors. A tightened review process and a large number of fraudulent applications have made L-1 visas more difficult to obtain. If one is approved, the L-1 visa holder may apply later for permanent resident status.

What are the benefits of obtaining an E-2 or EB-5 visa?

For the foreign investor who does not wish to become a permanent resident or citizen, the main benefit of the E-2 visa is that it requires less money for the initial investment. In addition, there is no additional paperwork and no other legal steps to take, as there are when using an EB-5 visa to progress toward permanent residency or citizenship. With both visas, investors benefit from having their families reside in the U.S. with them. For the EB-5 visas, there are substantial benefits, as with any other green card. Successfully participating in the EB-5 Regional Center Program, for instance, results in receipt of permanent resident status. Once one has attained this status, there is no longer any requirement to renew or reapply for any sort of visa.

How long does the process take?

Situations vary, of course, but it is possible for foreign investors to be in the U.S. within six months of starting the process in their home countries.

What are the common pitfalls in the application process?

As with any legal matter, especially one that may involve documents and procedures in two languages, having accurate information is essential. Most problems are a result of poor communication, so translation services may be necessary for some non-English speakers. If there are special circumstances, or difficulties arise during the application process, it may be wise to seek informed and experienced counsel. There are very few things as stressful as moving a family, a business and an entire life from one nation to another. Good, accurate, trustworthy advice is critically important.

Using Real Estate to Control Risks

Real estate allows you to control your risk because you can actively participate in the decision-making process. Passive investments such as stocks dont give you this opportunity. Movements in investment real estate values are less erratic than in the stock market. Most people dont understand the economic forces influencing the market. Since real estate is less volatile, its easier to control and to understand. A real estate investment is tangible. You can touch it, youve been exposed to it all your life, and you can identify with it. As a result of this familiarity, you are better able to understand it.

Effectively Reducing Your Taxes

Real estate ownership,especially midsize apartment buildings, continues to be the most popular form of investment because of its potential for substantial tax savings. Since you are able to actively participate in the management of real estate, the Internal Revenue Service (IRS) currently allows qualifying individuals to write off up to $25,000 per year against salary and other income. No other investment gives you this capability. In addition, you can defer paying income taxes on profits indefinitely by using tax-deferred exchanges.

Leveraging That Works

Real estate is the only major investment that gives you the ability to acquire ownership with very little money down. This degree of leveraging allows you to amplify profits by using other peoples money. The more assets you are able to control, the more opportunities you have to succeed. The degree of leverage is calculated by dividing the total purchase price of the property by the amount of funds used to purchase it. Thus, if a down payment of $10,000 plus a $90,000 loan is used to purchase a property, a 10 to 1 leverage ratio has been achieved. The greater the leverage, the more equity will increase or decrease with the change in value of the property.

Why Real Estate Investments are a “Smart” Way to Become Wealthy

Over 50 percent of the wealth of the world was in real estate in 2000. In the United States, real estate accounted for 48.2 percent of the wealth (of which residential real estate represented 36.7 percent). Equity investments (stocks) amounted to 19.3 percent and bonds 21.1 percent.

Real Estate Versus All Other Real Estate Investments

In the past 20 years, multifamily income properties have delivered the highest average total investment returns of all real estate types. With a built-in hedge against inflation, its no wonder that multifamily real estate has out-performed all other types of real estate investments with relatively low risk. Based on supply and demand over the next 10 years, residential income will out pace all other types of real estate investment. Strong demographic and financial indicators along with changing lifestyles should continue to positively influence apartment investments.

With an average unleveraged rate of return of 10.2 percent over the past 20 years, residential income property has proven to be an attractive low-risk investment. From 1990 to 2000 residential income investment provided a more consistent higher total average rate of return than all types of properties and with less variance.

Although 10.2 percent is a great rate of return, it wont get me on the dance floor. What will get me dancing is the rate of return using leverage. A rate based on a 25 percent down payment (leverage) works out to be over a 20 percent rate of return. This type of return definitely gets my feet moving.

Three Advantages Apartment Investments Have Over Other Types of Real Estate

Apartments should remain well ahead of other major property types because they are generally more stable. Three important factors account for this stability:
They are less dependent on business cycles for occupancy than any other types of real estate investments. It doesnt matter if interest rates and home prices are high or low, apartments are generally more affordable.
Apartments have shorter leases; thereby offering greater protection from inflation than the long-term leases associated with other properties. That is, rents can be negotiated more frequently.
The pool of tenants is much greater for apartments than other types of properties. This ensures a more consistent occupancy than industrial and commercial properties, which usually have only a few tenants to choose from.

The Building Size That Gives You the Greatest Profit Potential

When investing in apartment complexes, try to find the right building size that makes the best use of your time and gives you the greatest profit potential. Single-family houses and small apartment units do not always work because of the competition and property management problems. Managing property on a day-to-day basis may not be for you. You could spend just as much time on a four-unit building as on a 40-unit complex and not make nearly as much money. In fact, because owners of smaller properties usually become emotionally attached to their property, you tend to spend more time with them telling them that they made the right move. Larger units are the domain of the institutional investors, and you cant compete with their availability of funds. After making many property transactions, you may find, as we did, that mid-size apartment buildings are the right niche.

APARTMENTS-THE COMING BONANZA FOR YOU

Supply and demand play an important role in residential income property value. The demand for rental property is increasing because the number of people entering the rental market is increasing steadily each year. At the same time, construction costs, stricter zoning ordinances, and environmental factors are limiting the new construction of residential income property. Together, these trends bode well for investing in residential income property.

Because the 1997 tax act allows joint owners to exempt capital gains of $500,000, more and more people are selling their homes, saving their money, and moving into rental property. It is estimated that the demand for rentals is likely to increase over 10 percent during the next 10years. Residential income property offers one of the best protections against inflation. In fact, a study reported by the Journal of Financial Economics found that residential real estate is the only investment that offers a complete hedge against both anticipated and unanticipated inflation.

People always need the three basics-food, clothing, and shelter. As the population grows, the need for shelter grows along with it. The hedge against inflation with residential rentals is greater because, unlike long-term commercial leases, they are generally on a month-to-month basis. As prices increase, apartment owners can increase rents more rapidly with month-to-month leases than commercial owners who have long-term leases.

Low-rise developments or garden apartments, midsize apartment buildings, in suburban communities account for more of the buying and selling transactions than luxury apartments (which have a much smaller market). Seven out of ten millionaires made their money in real estate. Shelter is not only vital, but its often the greatest part of a persons net worth.

A midsize apartment is one type of investment that is a source of security and stability. Every investment has peaks and valleys, including rental real estate. But over the long-term, it always comes out on top. The key is knowing the right time to buy and sell. That is the golden rule in investing. This book will give you the knowledge you need to invest at the right time and right place.

REAL ESTATE: THE SHOCK ABSORBER

Real estate generally outperforms equities because of its higher yields, greater price stability, and downside protection even in a recession. When stock markets are down, real estate holds value and produces a positive return. Real estate is less prone to booms and busts than in the past. Residential income-producing real estate is now stronger than it has been in many years.

SUMMARY

Since apartment investments can be seen and touched and are not an abstract form of ownership evidenced by a piece of paper-they are investor friendly. People can identify with doors and windows, bedrooms and bathrooms, and floors and roofs. They dont feel that the market is being manipulated by programmed buying and selling. They feel they have control over their investments.

Shelter is one of the basic necessities of life. You cant comfortably sleep on gold, silver, or stock certificates, but you can stay warm and dry with a roof over your head. There will always be a need for housing. And midsized apartments fit the bill.