While real estate syndicates are formed for a variety of reasons, the typical reason is to create a tax shelter. More specifically, the purpose of a Real Estate Investment Trusts or REIT is to reduce or eliminate corporate income taxes. In the United States, where they are generally more widespread as investment vehicles, REIT pay little or no federal income tax but are subject to a number of special requirements set forth in the Internal Revenue Code, one of which is the requirement to distribute annually at least 90 percent of their taxable income in the form of dividends to shareholders.
The first REIT was introduced in the United States in 1960. The vehicle was designed to facilitate investments in large-scale income-producing real estate by smaller investors. The US model was simple, enabling small investors to acquire equity interests in vehicles holding large-scale commercial property. In order to ensure that REIT are widely held, they must have at least one hundred shareholders, no five or fewer individual shareholders can own more than 50 percent of the equity value of the REIT’s shares, and the REIT must be managed by one or more trustees or directors. At least 75 percent of the gross income of the vehicle must come from real estate related sources, and at least 95 percent of the REIT’s gross income must come from real estate related and other passive income sources.
To maintain competitiveness, many REIT have distributed in recent times among investors all or even more than their annualized earnings, often resulting in dividend yields comparable to bond yields. This is not, however, a practice that can be sustained for long even during times of appreciation of real capital assets and market values, much less when values are dropping. In fact, if an investment company such as a REIT distributes more than its taxable income, the excess distribution is considered “return of capital” for tax purposes, which is taxed to the individual investors as a capital transaction, rather than regular income. The end result is, therefore, that the distribution requirement may hamper a REIT’s ability to retain earnings and generate growth.
Because of this, the shift to privatization is driven by the realization that private buyers will pay more for the company than stock market investors will. In addition, rising costs of being publicly-traded companies are another factor enticing REIT to pull out of the stock market. And finally, being private gives Real Estate Investment Trusts a freer hand to reach out for deals in an increasingly competitive market. The reason is that public companies find it very difficult to grow through acquisition, as investors invariably do not justify the risk of development alternatives. The combined power of reduced expenses, consolidated pools of capital and abating real property values are exactly the perfect recipe for making a kill in real estate - and they are doing it!
The inverse relationship between interest rates and prices of REIT’s shares plays a role as well. On average, it is safe to assume that interest rate increases are likely to be met by REIT’s price declines in the Stock Exchange, because increasing rates correspond to a slowdown in the economic growth and less demand. But out of the context of the frantic buy and sell of Wall Street, even slowdown in the market for single-family houses can actually benefit REIT. This is so, because even though real property prices are in decline, it is still cheaper to rent than to own, especially during a period of rising interest rates. And REIT thrive on rentals. No city is a better environment for REIT to operate in than New York City, where some 70 percent of residents rent.
Bottom line is that the privatization trend has taken off this year, and that it is likely to continue for the next foreseeable future. For a list of the Top 100 US REIT, visit http://www.forbes.com
/2006/02/15/real-estate-REITS-cz_sf_0215reits.html?partner=msn
Luigi Frascati
Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.
Luigi is very proud to be an EzineArticles Platinum Expert Author. Your rating at the footer of this Article is very much appreciated. Thank you.
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Want to invest in Spanish real estate? Check out the Property Index inventory of properties for sale in Spain here!
Though the Property Index online service is really a pretty young agency, starting their business only in March of 2007, they were quick to achieve expert status. In actuality they are a unbelievably hassle free agency specialised in looking after every visitor determined to let, sell etc. real estate across the world. Their guarantee is to be of assistance to you to find precisely what you require fast and, obviously, without hassle. Real property can be located all over the place in our times, one of the hippest areas being realty on the market in Spain. It should really be easy as pie to tick off the fun property available for sale in Spain, one reason for selecting property here being properties for sale and the phenomenal option of being able to live right amid such a bubbly and great population.
This is one of the truly favored property markets in our times, and considering the lovely landscape and great climate that surrounds you night and day, how could you be wrong.? Real property in Spain is very rich in history, culture and art, this part of the world has been and still is home to a number of sophisticated cultures. Just twenty years ago you would find very few of English people in search of property in Spain. Just ask any one single person who has relocated to Spain and they are certain to back it up. Plenty of people would label it a passing rage and others label it a that’s quite a fetish. Clients keen on repairing to this area extend from young working couples who are looking for a challenge to OAPs who want to enjoy retirement.
Bear in mind, however, that you might encounter some difficulties when attempting to purchase property abroad — there will be a hundred disparate, incredibly complex, steps when plotting, sightseeing or finalising. If you only miss one single minor action it is certain to easily bring about sizable difficulties and, most importantly, money loss. Obviously and expectably with this favored location, property can be rather pricey in this destination and this, of course, is unquestionably owing to the expanding buyer demand. This notwithstanding, homebuyers are spoilt for choice in such a place boasting such a wonderful topography. Truly it’s able to offer the whole lot a client could covet, etc.
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Real estate investment is a great opportunity to earn profits and generate a cash flow. There is a slight difference between real estate investment and other types of investment. Real estate investment can be categorized as a long-term investment or short-term investment. Good real estate investor has ability to invest in real estate at right time.
Real estate investment requires proper knowledge and concentration to invest in good piece of land. Sometimes heavy investment gives wrong results in the future and sometimes with a small investment you can earn more. Investors should be alert at the time of investment in real estate.
If you’re going to rent your property you should have sufficient knowledge about tenant problems and requirements of tenants. You should be aware of all financial as well as legal requirements for your real estate. Investment goals are the primary factor for real estate investment. Decide your investment goals like what you want to do with your real estate.
Real estate market offers different types of strategies to invest in real estate. You should choose the best strategy as per your needs. Efficient real estate investors are able to make their fortunes in real estate business. People who invest in this business can live comfortably. They don’t have any tension about their survival. They can earn more and more profits with single right time real estate investment
Investment in real estate requires great commercial skills and knowledge like other businesses. Real estate business needs additional risk because sometimes you’re at risk in this business. Thats why a person with a great will power can easily handle this business. Forecasting in real estate investing can spoil your future so don’t overestimate your investment.
About Author: Author presents a website on Real Estate Investing. The website offers great knowledge about real estate investment and some tips on how to invest at right time. Also offers information about real estate investment training, real estate investing seminars, commercial real estate training, and a guide for real estate investing book. You can also visit his site about Real Estate License.
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Every month, an average of over 90 foodservice licenses are issued in every state. That’s over 4,500 new restaurants going into business every month across this country.
Do you have a restaurant space that you would like to fill with a quality tenant? Certainly there is no lack of tenants out there that would be interested in your site, so how do you go about finding the right tenant? This information was created specifically for Landlords who want to find the right tenant for their property.
When a prospective tenant is looking for a restaurant space, you as the prospective Landlord should know what they’re looking for, and in this order its; a lease they can afford, a site that fits their concept design wise, visible signage space, and parking. Everything beyond this is secondary.
Yes, the quality of the location is of vital importance, but the affordability of the site is paramount. Armed with this information, you should be able to present a sales package to your prospective tenant in terms that they can understand. If you can make the location financially easy to get into, that will give your prospective tenant the extra cash to commit to the other things related to getting the new restaurant off the ground.
In order to protect yourself from an unqualified tenant, there are many questions that you will want answers to. Set your expectations with the prospective tenant upon your first initial meeting. By doing this and listening closely to the answers, you can avoid a lot of potential pain for both of you.
Six factors that can help you select the right tenant:
#1. Create an interview checklist. You will want to cover a lot of ground with your new prospective tenant, and you’ll want to ask relevant questions. Depending on your unique situation, you may have legal restrictions placed on your ability to ask questions, so you will want to review your interview game plan with your legal advisor. This information is meant to be informative only and is not to be considered legal or accounting advice.
#2. Credit worthiness. Let the prospective tenant know that you care about their prompt payment history, and that you will expect them to personally be on the lease. Few restauranteurs will want to personally sign a lease, and it will be important to deal with this matter right up front. If the prospective tenant knows that their personal creditworthiness is of importance to you, you’ll cut right to the chase every time. Are you as a Landlord willing to lease to a company with little or no operating history? Perhaps if you have a space that has been vacant for a while you’d consider it, but you will want a significant amount of financial security up front.
#3. Background check. There’s an old saying that goes something like this, “What has happened in the past is indicative of what may happen in the future”. Your prospective tenant may have a background that may not be spotless. Only you can be the judge of what you are willing to toleratebut don’t forget that old saying. Background checks are inexpensive and can provide a lot of valuable information into the business dealings of your prospective tenant.
#4. Feasibility study. Has your prospective tenant had a feasibility study done or is one planned? This study will evaluate the chances of success of the new restaurant venture, by examining the location and facilities offered (such as: walk in coolers, delivery doors, restroom facilities, and power availability), concept, competition, niche market, financial opportunity, and the overall viability of the project. This study will give you and your tenant the security in knowing that the new restaurant may be the right concept in the right area. If the prospective tenant has not considered a study, and you like what you see from the Landlord perspective so far, you may wish to split the cost of a feasibility study with the tenant, or just pay for it yourself and bill the prospective tenant back over time. The findings are hard hitting, and factors that never may have been contemplated may be brought to light. Most importantly, the Feasibility Study will help identify and confirm the market niche that your prospective tenant is seeking to fill. This is of vital importance both to you and to your prospective tenant.
#5. Business plan. A restaurant business plan is focused on the menu, and everything revolves around it, including revenues, expenses, equipment, payroll projections and all of the other numbers and concepts that will go into a business plan. It is not realistic to think that your prospective tenant has a business plan yet, because the location issue is still unresolved, as it the seating count, and so many other variables. Want to surprise a quality prospective tenant with something great? Offer them a long term lease that includes a business plan that you are willing to pay for (and of course, include in the lease terms). This will set you apart as a caring Landlord who wants the very best for the tenant. Don’t you think this would be just the thing to close the deal? Think about how few Landlords are including a business plan with an executed lease, and you could end up being the Landlord of choice! One of the nice hidden factors in this equation is that as you have commissioned the business plan as the Landlord; don’t you now have the ability to give your input into the concept as a whole? Now, you are not only the Landlord, you have become somewhat of an informal business partner, allowing you a good view of what’s happening in your space without being surprised.
#6. Business team. A restaurant management team not only consists of the owner(s) and the managers, it’s those outside the day-to-day operation that provide advice, direction and counsel that play very key roles in the success of the new restaurant. Legal, accounting, and restaurant consultant all play unique roles and contribute to the profitability of the operation. Regardless of the experience of the prospective tenant, this team should be in place in the very early stages, and by the time this person is ready to start looking for space, it should be a red flag to you as the Landlord if this team is not together yet.
Norman Vincent Peale once said, “We tend to get what we expect”. Let’s begin expecting a quality tenant and put ourselves in a positive conducive to that goal by using these steps above. Stay focused on the goal of a long-term relationship with a profitable tenant.
If you would like additional information on Feasibility Studies, Business Plans, or other aspects of how a Restaurant Consultant can aid in adding value to your property, the author, Kevin Moll is President of Restaurant Consultants, Inc. and can be reached via his website at http://www.restaurantconsultantsinc.com or local Denver at 720-363-0164 or toll free at 1-800-961-6005.
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The continual record growth in the South Florida real estate industry has prompted SkyPan, an award-winning Chicago-based commercial aerial photography company to establish a permanent business presence in Miami. Mark Segal, SkyPan’s founder has announced that the company’s new Florida office will be located at 120 N.W. 25th Street, suite 204 in Miami. It will be the home base of one of SkyPan’s helicopters and will serve as a center of operations for all of the company’s Florida projects.
Since its inception in 1989, SkyPan has earned an excellent reputation through their revolutionary video and still camerawork onboard remote-controlled helicopters. Among SkyPan’s clients are many leading developers of high-rise buildings. The images SkyPan captures are used to enhance websites, advertising and marketing materials.
With the company’s five-foot helicopter hovering high above the future site of the building, SkyPan offers an alternative means to capturing images that are otherwise difficult and expensive to obtain. Segal can capture the panoramic aerial view at any pre-determined altitude or floor level with his patented technology, producing museum-quality photographic work. Finally, the speed and maneuverability of the helicopter make this approach to photography a superior alterative to a crane setup.
“We completed two exciting Miami projects in rapid succession, the Toscano Residences in Dadeland and Met3 in downtown Miami,” comments Segal recently, “The continuous growth of South Florida real estate translates into enormous potential for SkyPan.”
The list of SkyPan’s distinguished clients include: The Trump Organization, MDM Development, The Minto Communities, EDI and the Fifield Companies.
Nicole Lewis , Director of Media Relations for The Apple Organization.
Founded by the legendary Phyllis Apple nearly 30 years ago, The Apple Organization is a full-service public relations firm with a client roster of who’s who in the real estate and hospitality industry. The company is based in North Miami Beach and has grown to employ a full-time staff of 25 talented and diverse professionals. For further information, call The Apple Organization, 305-937-1581 or visit http://www.appleorg.com
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Investing in real estate is more complex than simply buying and selling homes. To help new real estate investors to decide which strategy might work for them I put together 5 rock-solid strategies. It is up to you which strategy you feel more comfortable with.
1. Buy and Hold
This real estate investment strategy is commonly known as rental properties. Becoming a landlord is easier than you think. You buy a property, you advertise it as “for rent” and you sign a contract with your new tenant. That’s where the love story ends. You need to know a lot about your duties and your rights as a landlord or you will find yourself in trouble.
Screening your prospect tenants is your first line of defense. Protecting your property from damage is your first duty. I might paint a little bit dark picture of being a landlord. But dealing with tenants can be the most frustrating job you ever had. Do yourself a favor and visit a bookstore or library and get as many books on landlording as you can get. Armed with this knowledge you will be able to create a positive cash flow and a long term relationship with your tenants every time you put the “For Rent” sign in the yard.
With the buy and hold strategy you basically have 3 income streams going at once.
Amortization; while paying your mortgage you also lower the amount you owe.
Appreciation; while owning the property it increases in value.
Tax incentive; as a landlord you will be able to deduct your investment cost over several years. (See you tax advisor for professional advice).
Based on this information you can easily see that even if the rent doesn’t cover 100 % of your mortgage payment you will still be able to create a positive cash flow.
2. Flipping
This is the art of “buying” and “selling” real estate investment without actually taking ownership. In a flip situation real estate contracts get assigned and the person who assigns the contract to someone else typically gets a commission for their services. That’s how you can make money with real estate without credit checks or no money down. Because you never take possession of the property, you don’t need to apply for a mortgage.
You only need 2 things to be able to flip a home. First, you need to find an attractive property that will sell very quickly. Second, you need to find a buyer within a very short period of time. Typically 2-3 weeks. Then you simply flip the contract to the new buyer and you will collect your commission at a so called “double closing”.
This sounds complicated at first, but with a little bit practice you will be able to create a nice income from this. By the way, this is the preferred concept of most real estate “gurus” who appear in late night infomercials.
3. Rehabs
Rehabs are the most risky form of real estate investments. You hunt for a cheap, run-down property and you hope that your preliminary remodel cost estimates will leave enough room for a nice profit. Well that’s the theory. Most real estate investors are failing with this type of strategy.
You either didn’t get the property cheap enough to make a profit or the damages are more extensive than estimated which will offset the cheap purchase price. To make matters worst. If during the rehab phase of typically 3-4 months the market is going south all bets are off. Trust me, I made my share of experiences with this and I told myself, never again.
4. Commercial Real Estate Investment
What comes to your mind first when you think of commercial real estate investment? Big factory complexes, shopping malls or maybe huge office buildings. Well, my answer is much simpler. Anything bigger than a 4 unit apartment building, some call it fourplex, is considered commercial. The great thing with commercial real estate is that the value of the property is determined by the rent income it generates and not by how crazy people are going with bidding on residential real estate.
Theoretically there’s no such thing as sellers or buyers market for commercial real estate. I wrote a complete article about the pros and cons of commercial real estate. So I keep this brief. Personally I love commercial real estate. Of course, commercial real estate is more or less off limits for beginners, because commercial real estate lenders want to see some form of prior experience in real estate investments. However, if you got some experience, go for it. As an added benefit; the competition is far less.
5. New Construction
This is the most affordable and easiest way of real estate investment. Getting into the earliest phase possible of a new development is a sure thing to make money. Keep an eye on the market and you will be able to sell your new home before construction is finished. The construction companies don’t like this, so they limit the number of homes an individual can buy. Even so, keep one or two homes constantly under construction and you will make some nice profits. Of course this works only in a sellers market. Stay away from this strategy in a buyers market or when you see big changes in the local real estate market.
Sincerely,
Peter Dobler
(c) 2005
Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner.
Learn more about real estate investments at http://www.doblerproperties.com or send a blank email to mailto:suncoastrenttoown@getresponse.com
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