Foreclosures
Foreclosures
Real Estate Investment Trusts (REITs)
1031 Exchanges
Foreclosures
Foreclosures are becoming more common as interest rates
rise and buyers struggle to make their mortgage payments. For the savvy real
estate investor, this represents opportunity.
Foreclosures are a way for you to
acquire a personal piece of property at distressed prices. Often you can find
a needle in a haystack, but you have to know how best to buy.
Many website will offer real estate foreclosure listings. You
can also find a lot of this information on your own through your county courthouse.
In many jurisdictions, homes that will be offered at foreclosure sales are routinely
published, usually once per month. Stop by your courthouse to pick up a pamphlet
on the current month's foreclosure listings.
The process of foreclosure works differently in different
states, but you will hear a lot about people buying property "pre-foreclosure."
This means the buyer swoops in before a home goes through the foreclosure process
and buys a house. Stay away from this unless you are a very experienced real estate
buyer.
Real Estate Investment Trusts (REITs)
A Real Estate Investment Trust or
REIT is a tax designation for a corporation investing in real estate that reduces
or eliminates corporate income taxes.
Like other corporations, REITs can be publicly or privately held. Public REITs may
be listed on public stock exchanges like shares of common stock in other firms.
During the recent housing boom, REITs tended to outperform other stocks listed in
the stock exchange.
1031 Exchanges
In the summer of 1990, the I.R.S. finally came out with
the long awaited rules on Deferred Exchanges.
Section 1.1031 of the Internal Revenue Code laid out in detail the procedure for
turning a sale and purchase type transaction into an exchange.
These new rules allowed owners of certain types of like
kind Real and Personal property to sell their property and buy other like kind property
without paying the Capital Gains Tax.
The like kind provision for Real property is quite broad,
and includes Land, Rental, and Business property. Any of which, can be exchanged
for the other.