Opportunities for development -- or re-development are everywhere you look. Not sure? Try this on for size in New York City.
The city's famed Bellvue Hospital, bilt in 1931, long a place for mental patients and criminals with severe mental problems, may soon be developed into an upscale hotel. Crazy idea? Sorry, bad humor there. Still, a hotel was not the first suggestion, just the one that makes most sense. Actually, the initial development plan was for condos.
"There are long corridors, and the rooms aren't very big," she said.
Even though officials expect the hotel and convention center would be marketed toward medical professionals and families of patients at nearby hospitals, it would be up to developers to deal with the building's sordid past.
"Not many hotels can claim Norman Mailer, Edie Sedgwick and Charlie Parker all spent the night, but the psych ward housed fewer sax players than ax murderers, said Dr. Frederick Covan, who for 14 years was its chief psychologist."
Read the story on development possibilites here.
Tuesday, April 1, 2008
Thursday, March 20, 2008
Dumbing Down Our Youth, Society (Financial Speaking)
I've been doing a slow burn for a few weeks now.
Particularly since I saw the latest "you are slowing down the wheels of progress if you use cash or write checks" commercials pushing Visa cards.
Well, I came close to duct-taping my head last night when I saw ANOTHER commercial I had been warned about by some colleagues in a networking group I belong to. Knowing my dislike of TV ads promoting irresponsible financial behavior (my words), they knew I'd be riled up by the latest ad from a credit card company/giant bank whom I will not name. Trust me, you'll know it the next time you see the television advertisement.
In the spot, a wife or girlfriend tells her male significant other "well, I guess it's time to get a new TV." He dutifully (giddily, truth be told) heads to the local big box electronics store where he is introduced to a plethora of flat panels, flat screens, big screens, BIG BIG BIG possibilities. And as he reclines in a luxurious plush leather recliner (reminiscent of my own "Black Beauty" recliner at home), he quickly pulls out his mobile cellular/internet/mp3/backscratching device and rapidly taps into his charge account to see how much he can spend.
Now notice, he is no longer shopping to see what he needs. He is not shopping based on a budget. HE IS SHOPPING BASED ON HOW MUCH CREDIT HE HAS LEFT ON HIS CHARGE ACCOUNT.
(insert scream here)
Folks, this is what I'm talking about. Kids and even adults are being trained to just "spend what you have," instead of working from a budget. It's no wonder I have so many people who realize they should have gotten into real estate long ago, and could be quite comfortable now, but they are in non-productive debt up to their eyeballs. And they gladly pile it on.
I'll get off the soapbox now. But for everyone who says they have trouble putting money aside, in order to purchase something for a long-term investment, I'll show you some item they bought (but really didn't need) because they had a little extra credit they could use. As for the TV couple, yes they needed a TV. But we are led to believe that he picked out the biggest and best.
Did he need the biggest and best? Probably not. But the credit card company made it so very easy for him to spend far more than he probably needed. A giant flat panel screen that will make him happy for a while, until he gets his monthly credit card statement.
But then, that's the credit game.
Thus endeth the lesson.
Particularly since I saw the latest "you are slowing down the wheels of progress if you use cash or write checks" commercials pushing Visa cards.
Well, I came close to duct-taping my head last night when I saw ANOTHER commercial I had been warned about by some colleagues in a networking group I belong to. Knowing my dislike of TV ads promoting irresponsible financial behavior (my words), they knew I'd be riled up by the latest ad from a credit card company/giant bank whom I will not name. Trust me, you'll know it the next time you see the television advertisement.
In the spot, a wife or girlfriend tells her male significant other "well, I guess it's time to get a new TV." He dutifully (giddily, truth be told) heads to the local big box electronics store where he is introduced to a plethora of flat panels, flat screens, big screens, BIG BIG BIG possibilities. And as he reclines in a luxurious plush leather recliner (reminiscent of my own "Black Beauty" recliner at home), he quickly pulls out his mobile cellular/internet/mp3/backscratching device and rapidly taps into his charge account to see how much he can spend.
Now notice, he is no longer shopping to see what he needs. He is not shopping based on a budget. HE IS SHOPPING BASED ON HOW MUCH CREDIT HE HAS LEFT ON HIS CHARGE ACCOUNT.
(insert scream here)
Folks, this is what I'm talking about. Kids and even adults are being trained to just "spend what you have," instead of working from a budget. It's no wonder I have so many people who realize they should have gotten into real estate long ago, and could be quite comfortable now, but they are in non-productive debt up to their eyeballs. And they gladly pile it on.
I'll get off the soapbox now. But for everyone who says they have trouble putting money aside, in order to purchase something for a long-term investment, I'll show you some item they bought (but really didn't need) because they had a little extra credit they could use. As for the TV couple, yes they needed a TV. But we are led to believe that he picked out the biggest and best.
Did he need the biggest and best? Probably not. But the credit card company made it so very easy for him to spend far more than he probably needed. A giant flat panel screen that will make him happy for a while, until he gets his monthly credit card statement.
But then, that's the credit game.
Thus endeth the lesson.
Monday, March 17, 2008
Use Your Investment Property As Health Care Insurance
Geez . . . the meltdown on The Street continues today. I've actually had calls from a handful of people who threw all their money into stocks and are now asking how 1031 exchanges work. The bad news is that unless they already own property for investment (not their personal home), the exchange won't benefit them until they purchase their second property.
But that's not what I want to write about today.
I picked up a nugget from colleague Furman Tinon last week that I wanted to pass along. We were talking at our weekly Columbus Real Estate Exchangors (CREE) meeting and the subject of health insurance came up. As people's premiums skyrocket, for short term medical needs or longer-term catastrophic healthcare requirements, healthcare is striking fear into the hearts of many. As if gasoline prices didn't already do that!
First off, a warning; This will make some brains explode, particularly those people who are urging on government-run, mandatory universal health care . . . Now, with that said:
One benefit to owning investment real estate is that it can be an adjunct to your existing health care insurance. Now I'm not saying DO THIS. I am suggesting it as an alternative, or as a supplement. But consider the following:
In today's market, there are nice homes in nice neighborhoods that can be purchased at a discount. They will appreciate back to where they should be and beyond over the next several years. Remember, investment real estate is NOT flipping. It is holding income-producing property for the long term -- for appreciation, income and the huge tax advantages, both annually and when you trade up through a 1031 tax-deferred exchange.
Additionally, investment real estate is not your house (unless you are charging your kids rent). Consider getting control of (purchasing) two, three or even four nice homes. You don't have to do it all at once. You can do it over time, and trust me, unfortunately home prices look to stay depressed for a couple years anyay. Rent them out. You don't have to have high equity in the homes, just control over them. How? Look at your insurance expenditures over the past several years and get an idea of what you pay out each year. If you applied the money you spend on premiums, co-pays, and policy-holder obligation toward paying down the mortgage more quickly, your investment real estate equity jumps that much faster.
And by building equity more quickly, you are building wealth quickly.
If you control the homes, you can re-finance and take money out to take care of your healthcare needs. Surgery coming up? Expecting a big out-of-pocket expenditure? Pull money out of your investment property.
It is a tax-free loan to yourself.
I ran it by a mortgage guy I trust, and his response was, "oh yea, that makes GREAT sense." And he wasn't looking at fees he could collect; he was looking at the cost/benefit of this approach to healthcare. The same response (generally) came from a tax attorney and a CPA whom I consulted. Soooo . . .
Add your name to the long list of uninsured in this nation! And quite possibly, be far more secure for it. Just something to chew on on a Monday.
But that's not what I want to write about today.
I picked up a nugget from colleague Furman Tinon last week that I wanted to pass along. We were talking at our weekly Columbus Real Estate Exchangors (CREE) meeting and the subject of health insurance came up. As people's premiums skyrocket, for short term medical needs or longer-term catastrophic healthcare requirements, healthcare is striking fear into the hearts of many. As if gasoline prices didn't already do that!
First off, a warning; This will make some brains explode, particularly those people who are urging on government-run, mandatory universal health care . . . Now, with that said:
One benefit to owning investment real estate is that it can be an adjunct to your existing health care insurance. Now I'm not saying DO THIS. I am suggesting it as an alternative, or as a supplement. But consider the following:
In today's market, there are nice homes in nice neighborhoods that can be purchased at a discount. They will appreciate back to where they should be and beyond over the next several years. Remember, investment real estate is NOT flipping. It is holding income-producing property for the long term -- for appreciation, income and the huge tax advantages, both annually and when you trade up through a 1031 tax-deferred exchange.
Additionally, investment real estate is not your house (unless you are charging your kids rent). Consider getting control of (purchasing) two, three or even four nice homes. You don't have to do it all at once. You can do it over time, and trust me, unfortunately home prices look to stay depressed for a couple years anyay. Rent them out. You don't have to have high equity in the homes, just control over them. How? Look at your insurance expenditures over the past several years and get an idea of what you pay out each year. If you applied the money you spend on premiums, co-pays, and policy-holder obligation toward paying down the mortgage more quickly, your investment real estate equity jumps that much faster.
And by building equity more quickly, you are building wealth quickly.
If you control the homes, you can re-finance and take money out to take care of your healthcare needs. Surgery coming up? Expecting a big out-of-pocket expenditure? Pull money out of your investment property.
It is a tax-free loan to yourself.
I ran it by a mortgage guy I trust, and his response was, "oh yea, that makes GREAT sense." And he wasn't looking at fees he could collect; he was looking at the cost/benefit of this approach to healthcare. The same response (generally) came from a tax attorney and a CPA whom I consulted. Soooo . . .
Add your name to the long list of uninsured in this nation! And quite possibly, be far more secure for it. Just something to chew on on a Monday.
Tuesday, February 26, 2008
Relocating To Same Area? Consider Your Existing Home As A Starter Investment Property
A lot of times, people who want to make the jump into investment property don't have the time, or patience, to go through a simple counseling session to determine which types of properties will help them toward their financial goals.
Occasionally, some of these same people are planning to relocate in the same area where they currently live. It might be moving up, or downsizing. A thought to the old "killing two birds with one stone" phrase is to purchase the second residential property, and convert the first residential property to an investment property.
No financial analysis as to the merits of an investment purchase is necessary because the owner already owns and even better, knows how the property has been maintained.
All that is left is a financial analysis of the area to determine market rents, advertise for and locate a new resident (I really dislike the term "tenant" in residential investment management) and determine whether the owner can withdraw some equity from the property to help with purchase of the "replacement" residence.
Occasionally, some of these same people are planning to relocate in the same area where they currently live. It might be moving up, or downsizing. A thought to the old "killing two birds with one stone" phrase is to purchase the second residential property, and convert the first residential property to an investment property.
No financial analysis as to the merits of an investment purchase is necessary because the owner already owns and even better, knows how the property has been maintained.
All that is left is a financial analysis of the area to determine market rents, advertise for and locate a new resident (I really dislike the term "tenant" in residential investment management) and determine whether the owner can withdraw some equity from the property to help with purchase of the "replacement" residence.
Monday, February 25, 2008
The Interest Rate Conundrum
A pretty good primer on interest rates, and the relationship with bond yields.
The piece also gives a lesson on how reducing interest rates only reduces mortgage rates so far. At some point they begin to rise. And fuel inflation.
But then, inflation is an investment property owners best friend. It is akin to having wealth forced upon you, as one of my colleagues likes to say.
Read the full report on interest rates at CNN Money.
The piece also gives a lesson on how reducing interest rates only reduces mortgage rates so far. At some point they begin to rise. And fuel inflation.
But then, inflation is an investment property owners best friend. It is akin to having wealth forced upon you, as one of my colleagues likes to say.
Read the full report on interest rates at CNN Money.
Thursday, February 21, 2008
Food For Thought
Politicians and others will often say that the way to even things out is to tax the rich. Okay, but who are the rich? What does "even things out" mean? Where is the line between merely being rich, and being highly affluent?
Here's a thought. Have you ever thought about the fact that the government taxes only income? What do the feds NOT tax? What about net worth? In fact, net worth is not taxed -- a reason why so many independently wealthy people (not the dripping wealth of Donald Trump, but the tens of thousands of "Buick Millionaires" who can be found throughout the U.S.) invest in commercial real estate.
Think about it. Your investment is building, and every five years or so you trade up to a larger property. During this time your property will have appreciated in value, you will have had the use of someone elses money (their monthly rent) to pay the mortgage on your investment, and when you buy something else, you can utilize a 1031 tax-deferred exchange and indefinitely defer payment of any capital gains taxes. The government taxes nothing, except your income from rents. But the "cost" of those taxes to you is offset through depreciation (what investment specialists like myself refer to as "cost recovery."
You don't have to trade just one property either. As your equity grows, you can pull money out of one investment, and use it to leverage the purchase of a second or third property. The portfolio builds, the incomes build, and with outside management at a nominal fee, you have "Mailbox Money" coming in for the rest of your life.
Building wealth does not have to be complicated. Using Commercial/investment real estate to build wealth is a means to take advantage of that whole "net-worth vs. income" tax dilemma.
Any questions?
Here's a thought. Have you ever thought about the fact that the government taxes only income? What do the feds NOT tax? What about net worth? In fact, net worth is not taxed -- a reason why so many independently wealthy people (not the dripping wealth of Donald Trump, but the tens of thousands of "Buick Millionaires" who can be found throughout the U.S.) invest in commercial real estate.
Think about it. Your investment is building, and every five years or so you trade up to a larger property. During this time your property will have appreciated in value, you will have had the use of someone elses money (their monthly rent) to pay the mortgage on your investment, and when you buy something else, you can utilize a 1031 tax-deferred exchange and indefinitely defer payment of any capital gains taxes. The government taxes nothing, except your income from rents. But the "cost" of those taxes to you is offset through depreciation (what investment specialists like myself refer to as "cost recovery."
You don't have to trade just one property either. As your equity grows, you can pull money out of one investment, and use it to leverage the purchase of a second or third property. The portfolio builds, the incomes build, and with outside management at a nominal fee, you have "Mailbox Money" coming in for the rest of your life.
Building wealth does not have to be complicated. Using Commercial/investment real estate to build wealth is a means to take advantage of that whole "net-worth vs. income" tax dilemma.
Any questions?
Wednesday, February 20, 2008
Definition For The Day
Wraparound Mortgage:
A wraparound mortgage is a mortgage that includes in its balance -- an underlying mortgage. Rather than having distinct and separate first and second mortgages, a wraparound mortgage includes both. For example, you might have an existing first mortgage of $100,000 at 6 percent interest. A second mortgage can be arranged for $50,000 at 10 percent interest. Instead of getting that second mortgage, the borrower arranges a wraparound for $150,000 at 8 percent.
The first mortgage of $100,000 stays intact. The borrower pays the wraparound lender one payment on the $150,000 wraparound, and the wraparound lender remits the payment on the first mortgage to the first mortgage lender.
A wraparound mortgage is a mortgage that includes in its balance -- an underlying mortgage. Rather than having distinct and separate first and second mortgages, a wraparound mortgage includes both. For example, you might have an existing first mortgage of $100,000 at 6 percent interest. A second mortgage can be arranged for $50,000 at 10 percent interest. Instead of getting that second mortgage, the borrower arranges a wraparound for $150,000 at 8 percent.
The first mortgage of $100,000 stays intact. The borrower pays the wraparound lender one payment on the $150,000 wraparound, and the wraparound lender remits the payment on the first mortgage to the first mortgage lender.
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