Investing Trends

BEGIN SETTING UP YOUR BUSINESS - First Step is to generate a name. Choosing a name may sound a bit mundane but there is more to choosing a name than you might think. Hopefully you are going to live with this name for a long time so let's get it right from the start. Changing names (or phone numbers for that matter) can set you back. You lose valuable time and customers every time you change. The whole idea behind a name is to brand that name in your market or business community. Branding a name takes time, persistence, energy and money. None of us have any of those elements to waste.

A good name should say WHO you are, WHAT you do, WHERE to get more information and HOW to contact you. That can be a tall order for one name. Some companies have tried to get the job done with names that represent their phone number along with their products or services. EXAMPLE: a fishing guide might advertise 1-800-Get-Fish. In its time this used to be a pretty good idea but today it falls short. Unless the name of the company is actually "1-800-GET-FISH" the name does not say WHO they are. The example also suggests that you should only call for information during working hours and NOT to call at midnight or on SUNDAY. After all it is a phone number and you wouldn't want to be rude and call in the middle of the night.

Also, newer phones, like the Blackberry for example, stretch their numbers over keys that don't work like the old telephone key pads. Today, on the new progressive phones, some letters are NOT on keys that have numbers associated with them or can't readily be found. I could not call 1-800-GET-FISH on my Blackberry to save my life. Times are a changing!

Today we have the Internet. People know that the Internet is open 24/7… 365 days a year. They also know that they can shop on the Internet any time – day or night - without disturbing a soul. Don't think for a minute that the world isn't shopping for their RE needs at all hours of the day and night. Customers are gathering information at all hours and following up in the morning. It is a fact! Your future customers will be online at 12:00am -1:00am -2:00am and 3:00am in the morning. Your market is a world wide market… if you are on the net. If you are not on the net you are severely handicapping your business. It is NOT up for debate. It only makes sense, these days, to have your name be your website name. I firmly believe that in the world of creative real estate YOUR name should end in .COM, or .NET or .ORG or .BIZ….ANYTHING is better than a name that does not lead your customers to your website.

If you are new in the business and on a budget you simply MUST have a name that is connected to a website. I know, the very thought of technology scares the hell out you. Don't panic. Everything is going to be OK. I'll explain more about WHY I feel that way but for now, let's get on with HOW to find and capture YOUR NAME.

a). Go to GoDaddy.com and buy a "BUY" domain name and a "SELL" domain name... may I suggest something like www.LisaSellsRE.com & www.LisaBuysRE.com or www.LisaBuysHouses.com & www.SellsHouses.com I actually own www.MitchBuysHouses.com and www.MitchSellsHouses.com ...it says WHO I am, WHAT I do and WHERE to find more information. Most Net users understand that the domain name, my website, also leads to HOW to contact me as well. Try to get your Buy and Sell names to match up.

b). Then, make your email address use the same domain name as your website. Example: Lisa@LisaBuysHouses.com. Now even your email will say it all; Who you are, What you do, Where to get more information and How to contact you. EXAMPLE:

Your BUY domain name (Website name) is www.LisaBuysHouses.Com


Your BUY email address is Lisa@LisaBuysHouses.com.

Your SELL domain name (Website name) is www.LisaSellsHouses.Com


Your SELL email address is Lisa@LisaSellsHouses.com.

If you are following along with The Wealth Address Millionaire Challenge, "The Real Estatification of Wesley O'Neill" you will get to see him go through the actual process of Creating, Searching For, Finding, Registering and Pointing his new name(s) on www.GoDaddy.com... Complete with an audio explanation and screen moves.

Right now we are talking about getting the most basic business foundation started… one name that is also your Website's name, and also used in your email address. By choosing a name the represents your website name that is used in your email address you are off to a great start. Your website can say much more than any business card or billboard could ever say. In the future, every advertising medium you ever use will drive your customers to your website. By making the name of your business your website's name you are giving your customers the chance to learn volumes about YOU and your BUSINESS at any time – day or night.

Expect to pay about $8.00 per year for each domain name. The more years you pay for in advance, the cheaper it gets. Remember, the right name tied to the right site can make you hundreds of thousands of dollars per year. Personally, I have made about that much, or in one case, MORE than $100,000 in ONE DEAL! I know, it sounds unreal right? I've been in this business for 10 years. This kind of income didn't happen for me until about 7 years in. The gurus out there will tell you that I am a slow learner. Maybe you will have it happen to you sooner. To read those success stories go to www.WealthAddress.com and search SUCCESS STORIES by Author Mitch Stephen or click the links below. Look for these titles:

"OFF THE COAST OF AUSTRALIA"


"CHEAP LOTS – LOTS OF INCOME"

Remember, you can "point" or "forward" email addresses to any account you want. You can point your NEW email address to your old one or you can point your old email address to your new one. That means you can still go to ONE place to get any and all of your emails if you wish. If I've lost you with this techno stuff don't worry about it right now. Some of you may not even have a website yet. Don't worry about websites right now either… it's a piece of cake… I'll tie everything together for you later. The important thing is that you capture your BUY and SELL website names as soon as possible. Then get the matching email addresses. Even if my ideas are not for you, you will still need these names if you intend to stay in the creative RE business.

When it comes to marketing, absolutely NOTHING is faster, cheaper and farther reaching than the Internet. This is the very First Step if you are going to NETWORK at lightening speed. Register your names and get your email addresses!

TAKE ACTION NOW!


VISIT www.WealthAddress.com

A common method of investing in real estate is doing a flip - buying and selling the same property in a short period of time. For the purposes of this article, there are basically two types of flips. You can buy a house at a wholesale level and flip it to another investor at a sort of wholesale level to pocket a small profit. Or you can rehab a house that you purchased cheaply or bought from a wholesaler and sell it to a retail buyer. In both instances, the goal in the investor's mind is to hold the property for a fairly short period to free up the cash for the next deal.

The challenge in this situation is that unless creative tax strategies - like a 1031 exchange - are followed, you will usually pay taxes on the gains at the short term capital gains rate - the most expensive tax on your profits that there is. In some cases this is OK. In others it is avoidable.

Let's examine the three levels of taxation that can affect a flip type house situation and discuss strategies that may maximize your after tax return on investment.(As always, it is best to discuss any scenario with your real estate investment savvy accountant to be appraised of the most current tax laws as they affect your particular flip scenario.)

When it comes to taxes and real estate investments, time is your friend. If you own a property for more than a year, you will get preferential tax treatment when you sell the property. Unfortunately, for the real estate investor, time is your enemy as more time means more holding costs and less profits realized. The trick is to find the proper balance and solution for each property to maximize the amount of profit you get to keep when the sale finally occurs.

There are basically three tax scenarios for buying and then selling a property in a specified period of time.

The first scenario is for a buy/sell cycle that runs for less than one year. If you purchase a house and then resell it before one year passes, your profits will be assessed at the short term capital gains rate. Short term capital gains rates are the highest amount you will pay in taxes on your profits.

The second scenario is where you have owned the property for more than one year. In this instance, you will pay taxes based on the current long term capital gains rate. This rate is generally significantly less than the short terms capital gains rate.

The third scenario is the best. If you are dealing with an owner occupied property - such as a flip where you live in it and make the repairs - you can keep all your profit tax free. It is required that you own and live in the property for at least two years out of any five year period. If you can meet this scenario, you can keep up to $500,000 in profit if you are married or $250,000 in profit if you are single. This profit is totally tax free and can be used for any purpose you wish. It is an extremely powerful tax investment strategy if it fits into your lifestyle choices.

After reviewing these three scenarios, you can tell that the best scenario from a maximum profit standpoint is the last scenario. If you are the type who wants to live in the house you are fixing and wait two years before selling, it is certainly a very powerful way to build great wealth over the long term. If you choose the right house in an area of rising property values and add value to the property, you can earn a significant amount of profit in two years and enjoy it tax free when you sell the property. It certainly makes a huge nest egg for your retirement or your next property purchase(s).

The only problem with this scenario is that you can do this on only one house at a time. So if you plan on flipping more than one house every two years, chances are very high that you will be encountering one of the first two scenarios on every deal. And if your investment strategy is to do more than one house every two years, you should not let tax consequences stop you. But you do need to plan for them in your profit formula for each house.

If you are wholesaling properties, you will hopefully always fall into the first category. And that is OK for a wholesaler. A wholesaler's goal is constantly making your money work for you. If a house sits too long, it costs you momentum and profits. You are earning your profits on the volume of properties you are flipping. Tax consequences in this scenario are simply a cost of doing business.

People who rehab houses to sell at retail have a more difficult decision to make. If you can rehab and resell a house for very quickly to get your money working for you again, it probably makes sense to take the hit on taxes that you encounter when you pay short term capital gains because you have your money back and working for you again. Again the tax on the profits is just a cost of doing business. And if you make $20,000 in profit and have to pay $6,000 in taxes, you still made $14,000 in profit. And you recovered your original investment. So even with a large tax hit, you still walk out of the deal with more than when you began the rehab project.

Of course, some rehabs take longer - several months or more. And sometimes , the profit in the house will be very large when the rehab is complete. In these instances, you need to calculate the cost of holding the house until one year has passed vs the additional tax liability that is created from selling it before one year passes. In this instance, you may choose to just hold the house empty until you can sell it for maximum profit. Or you may choose to do something creative in the sales process and either rent it out for a while (knowing that you will have to polish up the house before final sale) or offer it for sale via a lease option. Either technique will stretch the length of time that you hold the house, help cover the costs of that holding period (or even put profit in your pocket) and let you get that preferential tax rate when you finally sell the property.

Understanding and applying the current tax laws to your real estate transactions is an essential piece to understanding the total profit picture of a deal. If you don't understand them and plan for them, you could be in for a very large surprise tax bill at the end of the year - one large enough to cripple your real estate investment activities for a long time. Your best resource for understanding the tax ramifications of any investment is your real estate savvy accountant. You should have a person like this on your investment team to be sure you are maximizing your cash flow. If you don't you could be losing $1000's of dollars you didn't have to lose.

What I am talking about is Adjustable-Rate Mortgages (ARM)...

The definition of an ARM is: A home loan that permits the lender to adjust its interest rate periodically during the life of the loan on the basis of changes in a specified financial index.

ARM's typically start with a lower interest rate that gradually rises over time. If the financial index to which the loan is tied decreases, the interest rate of your ARM follows suit. Similarly, if financial index rate rises, so does your loans interest rate and monthly payment.

I would caution you with this type of loan because almost half of all American households have adjustable rate mortgages. When their payments go up, they can't afford the new payment. After you are done rehabbing your home, be cautious of the type of loan the buyer is getting. Make sure you are working with an ethical loan officer that is if you refer your buyer to your loan officer.

I also want to caution you on wearing too many hats. Don't be the rehabber, the loan officer , the title company, and the insurance agent. If you are more than one of those make sure you disclose it and make sure they sign something stating that they were aware of the no-arms length transaction.

I have only scratched the surface with these great tips for finding money to fund your deals and how to handle your contractors. In my system, Renovate Your Success, I can show you what you need to know about rehabbing property and the tools you need to be successful.