Wichita Area Real Estate Investors Association

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An Easy Tax Add-On: Estate Plans

Utah Real Estate Investors Association

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“Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do.” - H. Jackson Brown Jr

As we have seen this year, life can turn on a dime ... and we can't plan for every one of the specific ways it may do so. But we CAN plan broadly.

For me and my family, we've put some simple plans in place for a VARIETY of circumstances, not just financial or legal. And it truly helps us sleep better at night, just knowing we have it all covered.

And the unfortunate reality is that the most recent numbers indicate that almost 60% of Americans don't have a basic will -- and that's a big problem.

One of the big reasons that most families don't yet have this in place is because of some incorrect thinking about whether it's right for them or if it's even necessary. And sure, some just haven't gotten around to creating a will or trust. Others think they don't need an estate plan because they're not "rich".

I've even heard from people that they don't want to put it in place because when they do, it's sending some sort of death wish into the universe (or some such).
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Getting Started in Real Estate Investing

West DFW REI Group

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Diversity of Real Estate Investing

7 Feb 2021
Real Estate Investment | Longhorn Investments

If you own your home, your home equity may be your biggest asset. However, few people would consider home equity to be an investment asset because it does not produce income. Rather, its value comes as collateral on a home equity loan, home equity line of credit, or mortgage and it can only be monetized by selling the home. To generate income from real estate, you need to be involved in real estate investing.

The housing bubble of 2008 disabused investors of the notion that real estate will always appreciate in value. On the contrary, real estate is subject to the same market forces as any other asset. However, real estate has a few attributes that make it uniquely suited to any investment portfolio – land is in limited supply, location determines value, real estate lasts forever, and the property has multiple uses besides investment. Because of the uniqueness of real estate as an asset, real estate investing can be attractive as a side gig or as a full-time job. Here are some considerations for getting started in real estate investing.

Diversity of Real Estate Investing
Reality television programs popularized the idea of house flipping. While house-flipping is a form of real estate investing, it is not the only way to invest in real estate. Rather, real estate investments come in many different forms. Choosing the right one for you depends on many factors including your assets, the time and effort you can devote to real estate investing, and your tolerance for risk.

Multi-unit Residential Real Estate Investing
Multi-unit residential real estate, such as apartment buildings, duplexes, triplexes, and fourplexes, is a popular investment for two primary reasons:

Rental income: Rather than flipping the real estate to realize a one-time profit, income from the rented units provides a steady source of income.

Financing options: Residences with four or fewer units are eligible for home mortgages and FHA loans if you plan to occupy one of the units. If you do not plan to live in your multi-unit residence or the residence has more than four units, financing through small business loans or hard money loans is available.

Fix-and-Flip Real Estate Investing
This can be an involved and risky form of real estate investing. On the other hand, this can also yield some of the greatest returns. Fix-and-flip is exactly what it sounds like – you buy an existing residential building, repair it, and sell it.

The risk of fix-and-flip transactions comes from the investment of time and money into the property above its acquisition cost. For example, if you buy a home and invest $30,000 fixing it up, you must be sure that your renovations will attract a buyer willing to pay at least $30,000 more than you paid for the home so you can pay off your loan and turn a profit.

Securing Financing for Real Estate Investing
After you decide how you want to invest in real estate, you need to find a way to finance your real estate investment. As described briefly above, there are three general categories of financing for real estate investing:

Home mortgage: Home mortgages are widely available for relatively low-interest rates. However, the terms of home mortgages are long and loan requirements are high. Loans are usually available only to borrowers with high credit scores and borrowers with no credit history or poor credit history are excluded. Moreover, home mortgages can take weeks to be approved and funded so they are not always the best option for investors who need quick approval when the right property comes on the market.

Hard money loans: Hard money loans are offered based on the value of the real estate being acquired. Hard money lenders use a metric called the After Repair Value (ARV)which is the future value of the asset after its renovated. Generally, the hard money lender will lend between 60-70% of the After Repair Value. In this way, hard money loans can cover at least all or most of the repair costs since the value used is the after-repair value (ARV). Hard money loans can be approved and funded much more quickly than home mortgages because of the less stringent underwriting guidelines. Terms are much shorter, usually notes that last months rather than years.

Bringing it Together to Get Started in Real Estate Investing
After choosing a strategy for investing, targeting an asset, and securing financing, the hard work begins. You must acquire the asset, fix it if necessary, and flip it. However, by carefully doing the legwork at the beginning, you will be in a much better position of reaching your ultimate goal of making a substantial return on your investment!

For insight into the hard money lending costs associated with real estate investing, contact Ryan Blake

Filed Under: Blog, General, Hard Money
Tagged With: active real estate investor, Dallas hard money lender, hard money loans, investor loans, real estate investor loans
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A Checklist For Business Owners’ For 2020 Personal Income Taxes

Utah Real Estate Investors Association

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"Don't wait. The time will never be just right." - Napoleon Hill

As I mentioned last week, depending on how your business entity is structured, you could be paying anywhere from 15-25% (or more!) of your business revenue into the coffers of the IRS and various state departments of revenue.

This is the outcome of these blog posts: Guiding you in better business decisions.

Below is a list of what you will need during the tax preparation process on the personal side. Not all of them will apply to you -- probably MOST will not. Nonetheless, it's a useful tax checklist.

Before you get overwhelmed: yes, this is a long list -- but it's the unfortunate reality of our tax code that it's not even comprehensive! These items will cover 95% of small businesses. Really, this is for ensuring that you're able to keep every dollar you can keep under our tax code.

Also note: There are certain CARES Act (stimulus) and CAA (second stimulus) items that you will need to know as well. I've notated them in italics.

Personal Data
Social Security Numbers (including spouse and children)
Child care provider tax I.D. or Social Security Number
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Six Options For Small Business Aid And Tax Savings

Utah Real Estate Investors Association

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"15 years ago, the internet was an escape from the real world. Now, the real world is an escape from the internet." -Noah Smith

Depending on how your business entity is structured, you could be paying anywhere from 15-25% (or more!) of your business revenue into the coffers of the IRS and various state departments of revenue.

Which, of course, is what we're here to help you minimize.

That's why the "second stimulus bill" signed into law in late December 2020 was a welcomed one for us here at Utah Real Estate Accountants -- simply because it means small business owners are getting more choices during a very tumultuous time. Review this blog to see what is appropriate for your unique situation.

So, because we've been getting so many questions about these, I'd like to run them down as simply as possible so you can make the right choice of action. Because action will be necessary in some cases.

1) Revamped and expanded Employee Retention Tax Credit
In order to get this credit, you must have fewer than 500 employees  (previously 100). You also must have been forced to at least partially suspend business operations in 2020 or had a 20% revenue decline in any quarter compared with the same quarter of 2019.
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