Tag Archives: buying real estate

Why You May Want To Do A 1031 Exchange

Being involved in 1031 exchange will give you several benefits.  Its something that many investors have used over the years when buying real estate,its basically a tax strategy to defer your taxes so that way you can use the capital and help it to keep on growing and working for you.  Many investors have used it in their approach in buying homes in Santa Maria as investment properties.  It does not just help you to find the right property to own.   where to loan and finding the right people to work with but it also help you in making more money and saving your money from being taxed.  A 1031 exchange is a specific tax stragtegy, that is usually used for those that own real estate property as an investment.  This 1031 exchange can be used to roll-over profits earned from selling real state property to purchase another property instead of paying tax on the property that was already purchased.  For example when an investor buys one of the Santa Maria homes for sale at a discount and later turns around and sells that property for a profit he can take that profit and reinvest versus having to pay taxes on that profit as he normally would have to do on a regular transaction.  But there are some specfics that you need to familiarize yourself with first, now there is more to it than just this but at least you will have some idea and enough for you to want to learn more about doing a 1031 exchange.

There are two major benefits of 1031 exchange, first, it allows you to delay specific tax from the gains of the sale of the property, and instead invest it into other properties, from the capital gain so that it can be used later. Second benefit from 1031 exchange is that it allows for more equity to be part of the investment, since you are reinvesting your gains from the previous sale withoug having to give up any of it to taxes you have more equity invested in the new property from the very begining. So every time you invest in a new property, it will gain a higher value.  Now keep in mind this is a tactic that you can use every where not just in Santa Maria, California, but you will have to investigate how your state treats investment properties.  However, it should be remembered that the investment you will take into consideration is that it should be of the same kind of properties.  Another thing to keep in considertion is that you cannot touch any of the funds from the sale of your previous property to avoid the any Capital Gains.  You will have to use a trust company in doing a 1031 exchange that will help you to facilitate the process as well as make sure you are doing it correctly usually your title company can help you facilitate that just make sure you let them know that you will doing a  1031 exchange. Doing a 1031 exchange will help you with getting more out of your property and making a strong foundation in your real estate investment.

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What Are The Top Real Estate Mistakes

If you are a real estate investor, and looking to invest in the Santa Maria real estate market, whether you are a cash buyer or will need to get mortgage home loan.  There are a few things that you need to take into consideration especially if you are investing in real estate for the first time, then there are a number of mistakes that you should avoid, its always better to learn from someone else’s mistakes than from your own. These mistakes are some of the most common mistakes made by real estate investors, mostly because they have no idea of how to make the deal. So hopefully you learn something from this list of some of the biggest real estate blunders a real estate investor can make, even though I am sure there more than just this list. 😉 at least its a start.

Buying a house for its décor – This is one of the most common mistakes which real estate investors make. Just the décor of the house is not enough. You need to look at the surroundings, the neighbour hood as well as the actual architecture and floor plan of the house.

Not planning ahead – Before you decide to buy a house, you need to plan your finances. However, novice investors make the biggest mistake of not planning ahead. They just decide to buy a house because they liked it or because they thought it was a good deal without even calculating the finances.

Not checking the neighbourhood –Related to the first point, novice investors often ignore the neighbourhood before they buy a house. As a potential buyer it is absolutely critical for you to check out the area around the house, check nearby amenities like public parks or libraries as well as schools, shopping areas, hospital and church in the area.

Not getting help – If you are a novice investor, you need to get professional help to make the deal. A realtor will help you find the right house for you. If you plan to do everything single-handedly you will most likely end up wasting your money. Some of the people who can help you include a real estate agent, an appraiser, a home inspector, and a lender.

Making excess payment – If you do not have an appraiser at your side, chances are your buyer will ask you a very high price for the deal. If you end up paying more than your budget, you will be losing money.

Not doing your homework – If you leave out all the groundwork, you will be making a costly mistake. If you are a real estate investor, you need to do all your homework before hand to make sure everything is going in the right tracks.

Making incorrect estimates – If you miscalculate the money flow or make incorrect estimates about the price, you will end up losing money on the deal. Make sure you have a buying strategy in place and discuss that strategy with someone who has experience buying real estate. When planning your budget, you need to keep expenses like mortgage, taxes, insurance etc into consideration otherwise your budget will be disturbed.

Buying without seeing the property – A lot of you might think how this can be possible, but people do end up making this mistake, especially if they are moving from one state to the other. If you are planning to buy property in another area or state, make sure you personally visit the place to see its current condition and value. Take a friend along or hire an inspector to provide you with an assessment of the property you are about to buy.

Author Bio

Richard Jacobs is a chief editor since early 2007, and he currently works for MyDUIattorney. A website that helps you to find the right DUI lawyer, you can search for a Arizona DUI Lawyer or for Maryland DUI Lawyers online, anytime!

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