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Credit Tips

Affordable Credit Repair Services Overview: How to Tell If a Company Is Reliable and Worth Investing

There are companies that help people with bad credit by using a variety of strategies, such as getting negative items removed via negotiation, identifying errors and having them fixed, etc. Since the industry is wrought with scams, it’s important that people are careful with their choice of a company. Not all affordable credit repair services are legitimate.

It’s possible to identify the trustworthy companies by knowing what kinds of red flags to look for and to avoid any company that has those red flags. A few of these red flags include:

• Trying to charge money upfront. This is actually banned by the Credit Repair Organization Act.

• Promises of a “quick and easy fix”. This is simply not possible – especially if they haven’t taken the time to first look at the client’s credit reports.

• Making any types of guarantees or specific claims, such as “Raise your score 200 points!”

• Having a lot of negative reviews and complaints filed against them.

• Not being open about what types of strategies they are going to use.

• Suggesting that the client actually create another identity. This is obviously against the law.

The ideal credit repair organization will always be upfront about what they will be able to do and what they won’t be able to do. They should have a team of lawyers working for them and use only legal means to get negative items removed.

Find Affordable Credit Repair Services

What about affordability? Only AFTER giving a free consultation should a credit repair company bring up payment. Some affordable credit repair services offer different levels of service at different prices. The lowest priced option will at the very least offer Bureau Challenge services and Credit Interventions. Even though they cannot make any specific guarantees regarding credit scores, they can provide a personalized score improvement analysis each month, which includes targeted information that could potentially help raise the score.

Communication is another important factor, in addition to price and payment plans. It’s very helpful if each client has a legal expert such as a paralegal assigned to their case, with whom they can communicate at any time, via email, phone, or chat. There should be coaching and guidance, as well as tools to help clients keep track of their case and monitor the results 24/7.

There are many credit report repair companies and only a few of them are legitimate and affordable. One company to really consider is Lexington Law, where free consultations are available. There are a few different payment plans to choose from, all of which include affordable credit repair services.

Categories
Day Trading

The Absolute Basics Of Stock Investing

Probably the most lucrative, not to mention extremely risky, ways to enter into the market is through day trading investing. It has drawn many with its potential of huge income. It has helped most people make good fortunes in the money markets. Some people have lost their shirt. So if you are planning to take off for this type of market operation, here is what you should know:

Basically, day trading investing usually means you purchase and sell the stock on a single trading day. E.g. you purchase a stock of a business At 9.30 am and after that sell it on a single day at 11.00 am. Here you need to make a fast move for buying or selling the stocks so that you can book the quick benefits. Those who who get involved in day trading are known as day traders, who earn money from price movement of the stocks.

So as to become a very good day trader, you should have the following characteristics:

* Ability to be neutral, when the markets move down or up very sharply.

* Use a proper entry or exit strategy.

* Ability to make a record of all the trades.

* Give attention to several techniques that allow them great outcomes

* Ability to manage capital the right way

* Remain calm with uncertainty and risk

* Stop blaming the broker for downfalls and being responsible for your decision

* Possess risk capital for trading

Of these characteristics, your skill to keep a record of all your trades is regarded as the essential one. It can be difficult to remember each and every trade. Recording all of them will assure that you can figure out no matter if there are any certain trading patterns causing failure or success evident.

The trade record you made will want to have these information:

* The ticker at the time of entry

* Entry time.

* The time you exited.

* The exit and entry price.

* The actual cause of opting for the trade.

* Quick review of the occurrences in the market during that time.

* The behaviour of the stock.

Look at this information regularly to learn where you succeeded and where you failed.

Another essential attribute that you should really have is the power to be relaxed with risk. The markets tend to be a very unstable in the short run. Whenever you want to exit the trade by the end of the day, quite often that the price has dropped below your buying price. You will need to have the power to undergo this risk. Eliminate your greed and fear to succeed in the game.

Since you have chosen to day trade, you should have access to real time market data. You will need live stock ticker and quotes, live market indices and averages, real time market reports, real time charts, and actual price and news alerts. You must also keep a watch on the business stations to keep yourself updated on the market news

Once you’ve all these ready, you will be ready to start making your money in day trading.

Categories
Taxes

Self-Directed Investing For the Canadian Investor

Are you interested in taking control of your portfolio and becoming a "self-directed" investor within the stock market? If so then here is what you need to know.

An Overview of Self-Directed Investing

For most people the idea of ​​self-directed investing comes with a myriad of misconceptions and fears but with the right information and knowledge, making your own decisions can produce significant results. It is not unusual, for example, for self-directed investors to outperform managed money and certainly with a good strategy you can produce well above average returns on a consistent basis.

In a nutshell, self-directed investing means taking the responsibility and control of the decisions surrounding your investments. By opening a self-directed online trading account, you retain the authority to choose the type of investments you want in your portfolio (eg mutual funds, ETFs, individual shares, etc), as opposed to 'managed accounts' where these decisions are made by a financial planner or an other financial professional. Managed accounts typically have a fee associated with them. (The industry average in Canada is about 2½% of your portfolio per year.)

Why should we self-direct?

So is self-directed investing for you? Knowing why you want to do something usually means you have spent some time looking at the pros and cons. For self-directed investing consider the following.

  • Pros : More control and the potential for better returns, reduced fees, increased liquidity and greater capital appreciation.
  • Cons : Investors assume the risk – and the emotional stress. Many also lack the time, knowledge, and discipline.

If you list out your pros and cons then you can work towards getting the answers you need to make an informed decision.

How much money do we need to start investing?

Many people believe that to self-direct an account, you need 'lots of money' but this is not true. You can self-direct any amount. For example, the new Tax Free Savings Account (TFSA) that allows Canadians over 18 to deposit $ 5,000 each year beginning in 2009, is eligible to be self-directed.

People with a large portfolio (eg $ 250,000 and above) often start by self-directing only a portion of it. There is nothing wrong with using the TFSA as a starting point. And as you become more knowledgeable over time, you can transfer a portion of your retirement savings plan account to a self-directed account without forgoing the tax deferral status.

Know What You're Getting Into

Before you open your trading account and start putting your money to work, it's important to take stock (no pun intended) of a few things. First, understand what you are getting into. Most Canadians express a sense of fear when it comes to making their own investment decisions and investing directly in the shares of companies doesn't reduce that fear. The root cause of this fear, either consciously or subconsciously, often stems from a lack of knowledge on how the markets work and how successful they can be. People often think of investing in the stock market as gambling yet nothing could be further from the truth. If you were to ask those that have built great wealth utilizing the markets, you would rarely find "gambling" as a description of their activities.

For starters learn the terminology. A great resource is www.getsmarteraboutmoney.ca Developed by the Ontario Securities Commission, this website is a wealth of information on making and managing your own money. Then consider your options for education. If you are a novice investor with little to no experience a good foundation is important. Look for a company that provides a well-rounded learning experience and compliment that with your own reading and research. Think about how you have learned other skill-sets in your life and consider adopting that same process.

Create A Strategy

Part of your education should include the development of goals and a strategy including a trading plan that matches your risk profile. Setting goals means you can quantify your success at any given time against where you want to be. A good strategy will help you achieve your goals no matter what the market conditions are. And understanding your risk profile will protect you from making decisions that go against your tolerance level. Most novice investors get excited about making money because of course that is the point; however that by itself is not a good plan. A good education will teach you three important principles:

  1. Capital Preservation – keeping your money so you can invest it tomorrow and beyond.
  2. Money Management – knowing how to segregate your portfolio and your individual decisions.
  3. Risk Management – learning how to protect your capital if you make a mistake.

All of these need to be a part of your strategy and decision process.

The Conclusion

Self-directed investing doesn't have to be time consuming and it doesn't require a million dollars but it does require knowledge – good goals, a good plan and a good strategy.

Categories
Taxes

Cross Border Investing – Is It for You?

Cross border investing – has it been done in the past – yes; is it being done now – yes; will it continue to be done in the future – we believe so, however it will have ebbs and flows depending on the economic climate in the US. Are there problems with taxation and ownership in the US – that depends upon how you structure yourself before you begin investing.

Cross border investing is something that a lot of Canadians find attractive and the lure of the lower housing prices make Canadians very tempted to purchase real estate in the US. If you are considering investing in US real estate you will probably talk with others to get their impressions and advise on this. Unless they are people that are currently doing this type of business and are familiar with all the ramifications then chances are you will probably hear lots of different responses from them, such as – oh you don’t want to do that; you’ll be paying double taxes; the IRS will tax you to death; you’ll have nothing but headaches; you are not allowed to purchase in the US. etc. Remember to seek advise from those that are already in place building cross border portfolios.

So is it feasible to invest in the US? Is it possible to set up a portfolio that will develop a residual income package for you? Are you going to run into tax troubles that will be more problems and headaches than you are willing to deal with?

The answer, we think, to all of these questions is that it all depends on how you structure yourself in the beginning. Our understanding is that if you decide that you want to purchase a single property in the U.S., under your personal name, to use as a vacation property and then rent it out when you’re not down there using it – this is where you will run into problems with tax issues. Our understanding is that if you want to use ANY property to generate rental income you need to structure yourself properly to protect yourself from extra taxation and other problems.

If you want to create a portfolio of multiple properties that will create a passive income for you it is important that you structure yourself properly to deal with this aspect of doing business purchasing US real estate. The organization of a company and all necessary components of the company may seem complex and costly however if you do not structure yourself correctly it will lead to nothing but headaches, lots of confusion and probably much higher taxation than if you are correctly structured. Along with having a lawyer, who is knowledgeable in this type of business, who will structure your company correctly for cross border investing, it is important that you have a GOOD Canadian accountant. Take note that although you may think you already have a good accountant that takes care of your personal taxes and any Canadian investments you may have, you need an accountant who is also very well educated on the way the taxation issues will work across border. They must be very familiar with the taxation processes in the US. You will also need to have a US accountant as you will be doing a Canadian Tax Return and a US Tax Return. We would also recommend that you hire a good US bookkeeper to take care of the daily bookkeeping which will then be given to your accountant come tax time – believe us when we tell you – this will be less expensive than just giving everything to the accountant, have them do all the bookkeeping and then prepare your tax return for you.

Remember – protect yourself – structure, structure, structure – the information contained here is based on our personal experience. You need to educate yourself, make sure you know all the ramifications involved in cross border investing, spend the money to talk to and use the experts to be structured in the way that will be most beneficial to your particular needs – they will save you a lot of money and headaches in the long run.

Categories
Taxes

Liquidity, Safety and Rate of Return: 3 Essential Elements of Investing

Suppose someone were to approach you with an investment opportunity for your consideration. There are 3 key questions you’d want answered before committing your money. If you don’t understand these questions you may have a Missed Fortune.

1. Can I get my money back when I want it back?

2. Is it guaranteed or insured?

3. What rate of return can I expect?

Now let’s look at a couple of hypothetical investment opportunities.

In our first example, you get to determine the amount of your monthly contributions and the length of time you wish for them to continue. You can pay more than the monthly contribution, but not less.

If you attempt to pay less, the financial institution keeps all of your previous contributions. The money deposited in the account is not safe from loss of principal. In fact, each contribution you make to this account results in less safety.

The money in the account is not liquid should you need to get to it. The money in this account earns a 0% rate of return. Your income tax liability increases with each contribution you make. Finally, when the plan is fully funded, there is no income paid out.

Few people would argue that this is a prudent investment. Yet this is a textbook description of a house with a traditional amortized mortgage.

Our second investment opportunity involves burying a $100 bill in a tin can in your backyard. It’s liquid in the sense that you can access it. It’s safe so long as your dog doesn’t dig it up before you do. But it’s not earning a rate of return.

These two examples illustrate why a solid investment opportunity must include the 3 key elements of liquidity, safety and rate of return.

Liquidity is your number one priority. This means that, where your home is concerned, your equity must be moved to a position of liquidity where you can still access it even if your home were to be destroyed in a disaster. It also rings true if your money is in the stock market. What if you were to lose your job and need to make your mortgage payment for the next four months while you find work? With liquidity you can weather the financial storms of life.

Safety of principal can best be illustrated by what happened in Houston, Texas in 1980 when oil prices dropped drastically. More than 16,000 homes were foreclosed on at that time when people could no longer make their mortgage payments.

It didn’t matter if those folks had been paying an extra $100 a month toward their principal; the banks foreclosed when the mortgage payments stopped.

It seems counterintuitive but in a soft real estate market, those with the greatest amount of equity are at the greatest disadvantage. Given the choice between foreclosing on delinquent mortgage-holders with a high mortgage balance or a low balance, mortgage companies will nearly always go after those who have more equity.

The reason is obvious: it’s easier for them to sell the property and make back their money when there is high equity. In fact, the bank is often far more willing to work with those who owe more. Safety of principal is found in separating that equity from the property.

Which brings us to our final element.

The rate of return on home equity is always 0%. Always.

When you buy a house or refinance, you will always incur opportunity costs when you leave your equity in the property. This means that by keeping your money tied up in your property, you are giving up the opportunity to earn any rate of return.

On the other hand, if you separate that equity from the property, you can put that money to work earning a rate of return. Any good employee returns more in value than he or she costs her employer. Putting your money to work is no different.

Employment costs will always trump opportunity costs when it comes to earning a rate of return. This is especially true when the miracle of compounding comes into play.

These three key elements of liquidity, safety and rate of return are at the heart of the Missed Fortune strategies that help people build real wealth.

Categories
Taxes

Enjoyable Investing In Central Texas Ranch Land

One long-term investment that we made and have enjoyed over the past twelve years is rural central Texas land. Historically, land has increased in value over time making it a viable long-term investment. To quote the beloved humorist Will Rogers: “Buy land. They ain’t making any more of it”. Land, like any other investment fluctuates in value, but it has typically been a solid investment over the long haul. The ever-growing population of the world continues to rise. It makes sense that more food will have to be produced in order to feed the increasing population. Land prices should be on the rise again soon, and it appears to be an opportune time to invest in rural acreage before prices begin to soar here in central Texas. Ultimately, as world population increases, so will the demand for farm and ranch land. This was actually one of our deciding factors when we chose to invest in central Texas ranch land. According to an article in the September 2011 issue of Realtor® Magazine, things are looking up with regard to U.S. farmland & cropland values. The future is bright for those who have acreage to sell and for those ready to buy.

You don’t have to be an authentic farmer or rancher per se to own and make good use of your acreage. If, like us you’re not, you can quickly learn enough to run your own cow/calf operation or you can always lease out your property for cattle grazing or cultivation. You can immediately reap the benefits of an agricultural property tax exemption, better known as an “ag” exemption (significantly lowering property taxes – provided the exemption is already in place when you acquire the property) without having to be on site continually to run your cattle or farming operation. If a property doesn’t have an ag exemption, one can be applied for. The “ag” exemption along with the various income tax benefits of owning a ranch have provided us with substantial tax relief over the years. On the other hand, just having a place in the country to escape to when city life makes you crazy is reason enough to invest in central Texas ranch land or recreational acreage. When we first decided to buy acreage in central Texas’ “Top of the Hill Country” in Hamilton County as our refuge from the city (DFW), our main plan was to find a recreational spot where we could hunt, fish, 4-wheel and search for Indian artifacts and fossils. We knew that in order to maintain our ag exempt status, we would have to do a little more than just play. So, we bought a few cows to graze the range land and leased our cultivated fields to a local farmer for grain production.

We’ve made considerable effort to sensibly diversify our investments. Like many of you, for the majority of our working lives our investment portfolio has consisted of mostly 401K and taxable market securities. But, over the past 20 years, we’ve added to our portfolio: several rental properties, a combination cattle/recreational ranch in central Texas (where we now live), a commercial construction company in Waco, TX and finally, a farm & ranch real estate company located in Cranfills Gap, TX. As seasoned professionals, we understand the importance of financial diversification. In hind sight though, our best investment overall has been the central Texas ranch. Our initial decision to invest in rural central Texas property was made with the ultimate goal of “paying-off” in the future, but enjoying it now. We came to the realization that life is just too short & unpredictable and we made our choice. Of course, stock market investments are essential to insure our retirement future, but they are long-term investments that can’t be enjoyed on a consistent basis. There’s no guarantee that we’ll still be around to see the end result of all of our investments, but we are confident in our decisions – twelve years later we have absolutely no regrets. Not only are we having a great time living in the country now, but we also have peace of mind knowing that we’ve secured our future with smart investments.

For help locating the rural property of your dreams – visit http://www.txbrandland.com

Categories
Taxes

Real Estate – Investing for Retirement

Currently, this is one of the better ways of investing money but the main drawback is that it requires a lot of liquid cash but the returns are better than other investments. Before investing in real estate check out all of the loopholes before you invest. It is more than just living on a piece of land. Investing in real estate offers plenty of lucrative opportunities but it can be more complicated than dealing in bonds and stocks. Here are some ways you can invest in real estate.

Real estate trading

This is the fasted way of making money in the real estate market. The traders will purchase properties from owners with the intent to hold them temporarily and then later sell them for a better profit. This practice is also referred to as Flipping Properties. Traders will normally purchase properties that are very high-priced or highly undervalued. Sometimes when a trader purchases a property with a low price they will try to increase the value by doing some renovations. By doing this it can actually result in the trader getting a huge profit when they sell.

REITs

This stands for the Real Estate Investment Fund and is one of the easiest ways of investing. The invested money is put into this fund. It is created when a corporation or trust uses the investor’s money to operate and buy properties. It functions like a stock exchange. The corporation or trust will have to pay out ninety percent of its taxable profits to the various investors in the form of dividends. When they pay these dividends they are exempted from paying any corporate income taxes. This investment is the right choice for someone who wants to earn a regular income.

Giving on rent

Buying a vacant habitable house can be rented for a period of time with the owner of the property paying for the mortgage, various taxes, and maintenance. The rent is normally decided on the basis of where it is located. The owner will get a fixed amount of money each month in rent. Some owners like to charge more for rent so they can get more of a profit. The best thing to do is charge enough rent to cover the mortgage payment. When the tenant moves out you should put the property on the market to sell to get additional profits.

These are just three ways you can invest in real estate for your retirement. Make sure that when you are investing in real estate that you keep yourself updated with the latest strategies and regulations of the market.

Categories
Taxes

Tax Lien Certificate Investing – Anyone Can Do It!

16%-50% return on your investment… I know what you are thinking, there is just no way that is possible or legal, right? Well let me tell you this is the only way you can make such large profits on your investment dollar legally, safely, and secured by government guaranteed certificates.

But what’s the catch? Well, there really is no catch. I know, everyone talks about how all the gurus in the “get rich quick” industry want to shed the light on fascinating secrets, but never really do so before they have cashed your check and disappeared, right? I am here to inform you about this money making secret without asking you for a dime.

Tax Lien Certificates are the lowest risk investment instruments that are backed by the government and guaranteed to yield up to 16%-50% profits in most cases. I encourage you to do your homework on this topic and start investing as soon as you log off, you will not regret it, that much I know.

Here is how this works, In your local government things like road repairs, fire and police service, sewer expenses, etc. are paid by property taxes. In order to keep the town or county running efficiently people must pay those taxes when they are due. However not everyone does, but the government can’t just sit around and wait for the bill to be paid, they must still function, so in order to do so, they allow investors to purchase a certificate for the face value of the unpaid tax for said properties. Then whenever the owner of the property pays the taxes that are due, the certificate holder will receive their investment back along with a percentage of interest paid by the owner. Not bad for very little efforts right?

All though I mentioned this as being a “secret” it truly is not one at all, This secret is available to the public to utilize for investment purposes and has been for many, many years. The big wig bankers and investors just don’t want the average Joe to know about it because they want to make the money for themselves of course!

How do you get started? My best advice is to contact your local County or City Tax Collector office. (The office responsible for collecting such tax will differ from state to state) Find out from them how you can obtain a list of properties that are available for certificate purchase, or when the next Tax Lien Certificate Auction will be held. I encourage all of my clients and students to attend an auction first so they can understand their local government process & what is needed before placing a bid. Tax Lien Certificates will not make you rich overnight, but I can promise they will yield a very high return on your investment dollar at a much higher rate than any bank or Time Deposit has to offer in today’s market.

For more information on how you can obtain a step by step guide to Tax Lien Certificate or Tax Deed Investing, visit us online.

Categories
Taxes

How To Lose Your Shirt In Foreclosure Investing

Last year was a record year for bankruptcies. Delinquent payments on mortgages, according to the Mortgage Bankers Association of America, reveal a coming wave of foreclosures on the horizon.

There’s opportunity now for investors to step in and benefit from these properties that are about to hit the market. However, despite all the hyperbole, investors can lose money in real estate – a lot of money. If you have some cash itching a hole in your bank account and you’re looking for positive cash flow and possible high returns on investment, be sure to avoid these pitfalls in the foreclosure investor field.

Paying too much for a foreclosure. Many VA and HUD foreclosure buyers have found themselves getting caught up in the excitement of auctioning up on properties and watch, without even knowing it, their supposed cash cow die right in front of them. I have personaly seen happy investors bidding on a property in Malibu Bay, Pembroke Pines,Florida up to $158,250. I met them the next day and asked them why they just overpaid for a property with a market value of $150,000-$152,000. By the way, next door was on the market for an asking price of $154,900. If you must have a 20 or 25 percent spread to make money on the purchase, then stop bidding when the price gets below that spread amount.

In simple terms, if you’re bidding on a property with a $150,000 value and you intend to sell it for a 20 percent gain, then stop bidding when the price gets above $120,000. In a hot market, even foreclosures will sell at market price, but then the new owner must move in and most likely fix up a dilapidated property that has been neglected by the former owners. (Usually, when an owner is headed toward foreclosure, fixing the leaky roof or basement is the last thing on his mind, leaving it up to the ‘bank’ to fix instead.)

Getting a house without clear title. Since I’m not an attorney, I won’t go deep into this point, but make sure you can get clear title to a property before you put your $10,000 earnest money deposit into the deal. Order a title search by an attorney to find out if you’re going to have any problems taking title to the property. If you can’t get title, you can’t sell the property.

Negative or unprofitable cash flows. The whole idea behind buying a foreclosure is to buy low enough so that rent checks will cover the investor’s mortgage payment, taxes, insurance and fees each month and then leave the investor some profit at the end of the month. Unless the property is in pristine condition and all the systems will last repair -free years, you’re setting yourself up for financial hardship if an air conditioner breaks or the refrigerator has a compressor attack.

The monthly cash flow should include enough to finance any breakdowns or repairs while the tenant lives in the dwelling. Negative cash flows are not deductible expenses.

Not taking care of little problems before they become big problems.

Don’t take the cheap way out on being a landlord. A house starts deteriorating from the day the builder completes its construction. Your new investment property is creating cash flow – take care of it. Keep it painted regularly, clean carpets and floors between tenants, fix broken windows, repair leaks promptly, replaced rotted wood, etc. If you let the property deteriorate until you can’t rent it out any longer, you’ve waited too long to fix these items. In addition, to fix defects early on will save you money if you wait and the bill doubles or even triples.

Failing to educate yourself on tax benefits of owning investment properties. If you’re going to invest in rental property, talk with professionals in the field who know how to maximize your financial benefits form this new form of investment. Accountants, attorneys and real estate practitioners are all worth their fees as they help you avoid pitfalls, increase your gain and keep you out of trouble.

Categories
Taxes

Guide to Investing Out of State for Commercial Real Estate Investors in Los Angeles, California

Isn’t real estate supposedly one of the best categories of investment classes in the world? People always need a place to live right? Then why does it seem almost impossible to invest in real estate in California, which is known next to New York and Florida, as one of the top places in the world to invest in real estate, unless you have a few million dollars? It is because they are densely populated and in the case of Los Angeles have already risen dramatically not only in the last six years by 40% but have quadrupled, 400%, over the last 30 years. (S&P Index LA) Those are great returns for an asset that is considered to be safe and moderately growing. So what should a person do nowadays if they live and grew up in Los Angeles, and want to invest in real estate but don’t have a million dollars to invest? The solution is simple, invest out of state!

A lot of people think it is hard to invest in a state such as Texas. You have to manage the property, collect rent, and make the right investment decisions for the long term in a state that at this point in time you are only somewhat familiar with, right? Well allow me to explain to you why it is great for someone to think otherwise, and how a great agent can acquire property for you in another state in a deal which the tenants, the ones using the property space, are managing the property for you and even paying your property taxes! Not only that, but these are institutional companies who guarantee you the money you are promised for periods of up to 10-15+ years, per contract. This is only the beginning of me explaining how investing outside of your comfort zone with the proper advice can benefit you and your family.

How about the safety of these investments? I don’t want to lose my hard earned dollars. Neither do you. So why would you invest in anything outside of the Los Angeles, or the California region? A region that has proven itself for decades and showing promising signs of growth in certain areas. These are definitely valid points in the eyes of an avid investor, but maybe it’s time to reconsider. I already mentioned that property prices in Los Angeles are expensive, that being one of the main reasons to invest elsewhere.

Haven’t you noticed a lot of people who have been living in California are moving to the surrounding states where it is a lot cheaper to live and in places where new and old business industries are beginning to thrive? I personally know a few people who have moved away. Texas alone has added over 5 million people to its population in the last thirteen years according to Texas Department of State Health Services, and it is still growing. With that in mind, doesn’t it seem like a great deal to acquire a commercial property in a state where you can buy commercial real estate for around $150,000-$300,000 down? You couldn’t dream of that in Los Angeles unless you wanted to buy an old run down building.

Are you starting to understand how easy it can be to invest outside of your state, and why it is more lucrative? If you do, that’s great, if not here is another way to understand it in a situational scenario with numerical figures.

My friend Jack has $500,000 right now that he wants to invest.

This is what would happen if Jack invested in a Los Angeles Commercial Property from 2015-2020.

Let us say Jack doesn’t take out a Loan and buys a Fee Simple Commercial Estate.

$500,000 x 4% Interest Yearly = $20,000 Income / Year (Before Taxes) x 5 years = $100,000

Over this period of time the value of the property goes to $600,000 by 2020, and Jack sells his property to Jenner. That makes for a profit of $200,000 before Capital Gains, and Income Taxes.

Now, let us say Jack went outside his comfort zone and decided to get a property in Texas.

$500,000 x 8% = 40,000 Income / Year (Before Taxes) x 5 Years = $200,000

Over this period of time the value of the property goes up to $750,000 and Jack now shows Jenner how much easier it was to invest out of state because of the structure of this deal. He told Jenner that since Starbucks was managing his property and paying him on time without question every month, this made it much easier for him as an investment. Now, Jenner wants to buy this investment off Jack, because he sees the benefit and Starbucks wants to sign again for an additional 10 years with a rent increase!

Jack just made another $250,000, on the increase of the value of the property.

In total, Jack has now accumulated $450,000 before taxes over the last 5 years investing in Texas. Get it?! Do you understand the benefits and the financial rewards? Not to say you cannot have these structured deals in Los Angeles, but remember they offer half as much interest in a market that has already gone up 40% in the last six years.

Jack has made $450,000 investing in Texas vs. $200,000 investing in California with the same amount of money. That’s an extra 125% increase in profit, which will make you an even astonishingly larger amount of money on your next big investment!