Money To Invest
I am closing on a property tomorrow that I am selling , it was a condo I used for rental income. What would be some choices to invest in, the condo is mine free and clear I have no mortgage on the property, and the house I live in is also free and clear of a mortgage, Any ideas!
Thanks Maxvette
Well probably the way to start on this question is to find out more about your goals. What would you like to do/have in your life that is not there now? How old are you? What income do you have from other sources? Do you have any hobies?
Personally I think that for most people real estate investment is a means to some other end. And when you start to think about what kind of investments you want to make you want to keep those ends in mind and 'work backwards" to structure the investments to help you meet those goals.
Peoples goals, and the means to reach them, are more diverse than you might think. I think that they should be even more diverse than they are. After all what is the point of living in a free society if everybody ends up doing the same things?
Anyway, I only have one very broad suggestion. Assuming that you pay some money in income taxes get those properties mortgaged some. Currently you have thousands of dollars sitting being essentially unproductive. The interest you pay is a tax deduction. Assuming you are in a 30% tax bracket that means your after-tax interest rate these days is somewhere close to 5%. Get the money out of your house and invest it someplace where it will earn a higher rate of return.
There are many investment possibilities. Even though you are implying you want to invest in RE (you posted to a RE forum), it might not be the best option for you.
As noted by another, you have to decide what your goals are.
You also need to understand the types of risk you want to take. Having two places free and clear normally implies a very low risk profile.
You can buy more property, you can be a lender to someone else, you can finance construction or speculate in land. All of these are real estate related, have very different characteristics and rather different risk/reward possibilities.
Then there is the tax side of things. Some investment might be better for you depending on your tax status.
Finally you might be more interested in current income vs long term growth. You can have a mix of you can be bias towards one of the other.
It is great that you are asking. The answer is more about you then anything else. You can do some reading, continue discussions in on-line forum, find a financial planner (they normally only suggest the investments that they can easily sell vs. things that do not pay commission unless you get a fee based planner).
John
[addsig]
Thanks for the replys and I will look other possiblities maybe Tax leins and such.
Thanks again
Vettemax
The median price of homes in Newark, NJ, homes has hovered at about $330,000 for the first five months of this year, she said. "Rising interest rates will cool the market. We're expecting price appreciation of less than 10 percent this year and down to 7.5 percent in 2005. Compared to markets like New York City and Boston, New Jersey's housing market is stable."
This is a small paragraph taken from an article by Inman News titled New Jersey real estate market stabilizes
The Realtors association report said across the state, the upward trend in home prices showed signs of moderating during the second quarter, with six of seven areas of the state reporting second-quarter price appreciation of between 11 percent and 18.6 percent over the year-ago quarter. Two years ago, prices were rising as much as 30 percent annually.
See http://www.nj.com/business/ledger/index.ssf?/base/business-7/1092389599243270.xml
To know where and what market to invest in the key is "Your State Market Conditions".
Lets take the low in of 11% for real property and The holder of a tax certificate receives 18% interest until redeemed and the owner of record or other interested parties in the property may redeem within a two year period following the tax sale.
Now let's take a 2-year investment in real property and tax certificates and use a $100,000 investment.
On real property you will return $23,210 from your investment.
On tax certificates you will return $36,000 from your investment with a grater risk as you are investing in paper.
Determine your risk, your needs educate yourself and you will make the proper investment.
Thank you, it all sounds and looks easy, but with out the proper back round checks and investigation in the Props with the tax leins it could be a diaster, I will do a lot of reading and research before I jump in, Thanks again for the info.
You have made a vary wise choose to educate before investing. Education in any form of real estate investing simply will lessen the opportunity of failure.
Maxvette,
You need to understand what you want your money to do for you before you invest. Otherwise, you risk not meeting the goals you didn't know you had because you chose the wrong investment vehicle. As everyone else has said, you also need to become educated about your options.
I am looking to safely get decent returns on my money, I would say I am pretty well off with my job and financial situation, good job, good amount in 401K , large amount of savings, CD's Company stock, etc... It is just that once you acquire the type of money I have saved and Props I own you don't want to risk losing what you worked so hard to get. I guess I am looking for a profitable side line to make money in my spare time.
It sounds to me like you are looking for a long term investments that produces passive income. In general to me that means rentals and notes. Both can be done so you don't have to talk to a single tenant, and give you the security your looking for. In addition, if you mortgage your rentals, you will be able to purchase more of them, and enjoy some tax benefits. Just don't manage your own properties. Both of these vehicles will give you passive income, and will allow your money to work for you.
The other thing you can do is to roll your 401K into a self directed IRA, and use those funds for real estate. The earnings on those deals are tax deferred or tax free depending on the kind of IRA you own.
Have you considered REITs?
REITS were my first choice, I work for an Investment Bank, Financial company, and looking to talk to some of the bankers about these, it is just hard to get them, they are busy all the time. If you have any info on REITS, feel free to tell me a little about them.
Thanks