5 uses for resources

So… You may ask yourself, why should you buy or invest in real estate in the First Place? Because it’s the IDEAL investment! Let’s take a moment to address the reasons why people should have investment real estate in the first place. The easiest answer is a well-known acronym that addresses the key benefits for all investment real estate. Put simply, Investment Real Estate is an IDEAL investment. The IDEAL stands for:

• I – Income
• D – Depreciation
• E – Expenses
• A – Appreciation
• L – Leverage

Real estate is the IDEAL investment compared to all others. I’ll explain each benefit in depth.

The “I” in IDEAL stands for Income. (a.k.a. positive cash flow) Does it even generate income? Your investment property should be generating income from rents received each month. Of course, there will be months where you may experience a vacancy, but for the most part your investment will be producing an income. Be careful because many times beginning investors exaggerate their assumptions and don’t take into account all potential costs. The investor should know going into the purchase that the property will COST money each month (otherwise known as negative cash flow). This scenario, although not ideal, may be OK, only in specific instances that we will discuss later. It boils down to the risk tolerance and ability for the owner to fund and pay for a negative producing asset. In the boom years of real estate, prices were sky high and the rents didn’t increase proportionately with many residential real estate investment properties. Many naïve investors purchased properties with the assumption that the appreciation in prices would more than compensate for the fact that the high balance mortgage would be a significant negative impact on the funds each month. Be aware of this and do your best to forecast a positive cash flow scenario, so that you can actually realize the INCOME part of the IDEAL equation.

Often times, it may require a higher down payment (therefore lesser amount being mortgaged) so that your cash flow is acceptable each month. Ideally, you eventually pay off the mortgage so there is no question that cash flow will be coming in each month, and substantially so. This ought to be a vital component to one’s retirement plan. Do this a few times and you won’t have to worry about money later on down the road, which is the main goal as well as the reward for taking the risk in purchasing investment property in the first place.

The “D” in IDEAL Stands for Depreciation. With investment real estate, you are able to utilize its depreciation for your own tax benefit. What is depreciation anyway? It’s a non-cost accounting method to take into account the overall financial burden incurred through real estate investment. Look at this another way, when you buy a brand new car, the minute you drive off the lot, that car has depreciated in value. When it comes to your investment real estate property, the IRS allows you to deduct this amount yearly against your taxes. Please note: I am not a tax professional, so this is not meant to be a lesson in taxation policy or to be construed as tax advice.

With that said, the depreciation of a real estate investment property is determined by the overall value of the structure of the property and the length of time (recovery period based on the property type-either residential or commercial). If you have ever gotten a property tax bill, they usually break your property’s assessed value into two categories: one for the value of the land, and the other for the value of the structure. Both of these values added up equals your total “basis” for property taxation. When it comes to depreciation, you can deduct against your taxes on the original base value of the structure only; the IRS doesn’t allow you to depreciate land value (because land is typically only APPRECIATING). Just like your new car driving off the lot, it’s the structure on the property that is getting less and less valuable every year as its effective age gets older and older. And you can use this to your tax advantage.

The best example of the benefit regarding this concept is through depreciation, you can actually turn a property that creates a positive cash flow into one that shows a loss (on paper) when dealing with taxes and the IRS. And by doing so, that (paper) loss is deductible against your income for tax purposes. Therefore, it’s a great benefit for people that are specifically looking for a “tax-shelter” of sorts for their real estate investments.

For example, and without getting too technical, assume that you are able to depreciate $15,000 a year from a $500,000 residential investment property that you own. Let’s say that you are cash-flowing $1,000 a month (meaning that after all expenses, you are net-positive $1000 each month), so you have $12,000 total annual income for the year from this property’s rental income. Although you took in $12,000, you can show through your accountancy with the depreciation of the investment real estate that you actually lost $3,000 on paper, which is used against any income taxes that you may owe. From the standpoint of IRS, this property realized a loss of $3,000 after the “expense” of the $15,000 depreciation amount was taken into account. Not only are there no taxes due on that rental income, you can utilize the paper loss of $3,000 against your other regular taxable income from your day-job. Investment property at higher price points will have proportionally higher tax-shelter qualities. Investors use this to their benefit in being able to deduct as much against their taxable amount owed each year through the benefit of depreciation with their underlying real estate investment.

Although this is a vastly important benefit to owning investment real estate, the subject is not well understood. Because depreciation is a somewhat complicated tax subject, the above explanation was meant to be cursory in nature. When it comes to issues involving taxes and depreciation, make sure you have a tax professional that can advise you appropriately so you know where you stand.

The “E” in IDEAL is for Expenses – Generally, all expenses incurred relating to the property are deductible when it comes to your investment property. The cost for utilities, the cost for insurance, the mortgage, and the interest and property taxes you pay. If you use a property manager or if you’re repairing or improving the property itself, all of this is deductible. Real estate investment comes with a lot of expenses, duties, and responsibilities to ensure the investment property itself performs to its highest capability. Because of this, contemporary tax law generally allows that all of these related expenses are deductible to the benefit of the investment real estate landowner. If you were to ever take a loss, or purposefully took a loss on a business investment or investment property, that loss (expense) can carry over for multiple years against your income taxes. For some people, this is an aggressive and technical strategy. Yet it’s another potential benefit of investment real estate.

The “A” in IDEAL is for Appreciation – Appreciation means the growth of value of the underlying investment. It’s one of the main reasons that we invest in the first place, and it’s a powerful way to grow your net worth. Many homes in the city of San Francisco are several million dollars in today’s market, but back in the 1960s, the same property was worth about the cost of the car you are currently driving (probably even less!). Throughout the years, the area became more popular and the demand that ensued caused the real estate prices in the city to grow exponentially compared to where they were a few decades ago. People that were lucky enough to recognize this, or who were just in the right place at the right time and continued to live in their home have realized an investment return in the 1000’s of percent. Now that’s what appreciation is all about. What other investment can make you this kind of return without drastically increased risk? The best part about investment real estate is that someone is paying you to live in your property, paying off your mortgage, and creating an income (positive cash flow) to you each month along the way throughout your course of ownership.

The “L” in IDEAL stands for Leverage – A lot of people refer to this as “OPM” (other people’s money). This is when you are using a small amount of your money to control a much more expensive asset. You are essentially leveraging your down payment and gaining control of an asset that you would normally not be able to purchase without the loan itself. Leverage is much more acceptable in the real estate world and inherently less risky than leverage in the stock world (where this is done through means of options or buying “on Margin”). Leverage is common in real estate. Otherwise, people would only buy property when they had 100% of the cash to do so. Over a third of all purchase transactions are all-cash transactions as our recovery continues. Still, about 2/3 of all purchases are done with some level of financing, so the majority of buyers in the market enjoy the power that leverage can offer when it comes to investment real estate.

For example, if a real estate investor was to buy a house that costs $100,000 with 10% down payment, they are leveraging the remaining 90% through the use of the associated mortgage. Let’s say the local market improves by 20% over the next year, and therefore the actual property is now worth $120,000. When it comes to leverage, from the standpoint of this property, its value increased by 20%. But compared to the investor’s actual down payment (the “skin in the game”) of $10,000- this increase in property value of 20% really means the investor doubled their return on the investment actually made-also known as the “cash on cash” return. In this case, that is 200%-because the $10,000 is now responsible and entitled to a $20,000 increase in overall value and the overall potential profit.

Although leverage is considered a benefit, like everything else, there can always be too much of a good thing. In 2007, when the real estate market took a turn for the worst, many investors were over-leveraged and fared the worst. They could not weather the storm of a correcting economy. Exercising caution with every investment made will help to ensure that you can purchase, retain, pay-off debt, and grow your wealth from the investment decisions made as opposed to being at the mercy and whim of the overall market fluctuations. Surely there will be future booms and busts as the past would dictate as we continue to move forward. More planning and preparing while building net worth will help prevent getting bruised and battered by the side effects of whatever market we find ourselves in.

Many people think that investment real estate is only about cash flow and appreciation, but it’s so much more than that. As mentioned above, you can realize several benefits through each real estate investment property you purchase. The challenge is to maximize the benefits through every investment.

Furthermore, the IDEAL acronym is not just a reminder of the benefits of investment real estate; it’s also here to serve as a guide for every investment property you will consider purchasing in the future. Any property you purchase should conform to all of the letters that represent the IDEAL acronym. The underlying property should have a good reason for not fitting all the guidelines. And in almost every case, if there is an investment you are considering that doesn’t hit all the guidelines, by most accounts you should probably PASS on it!

Take for example a story of my own, regarding a property that I purchased early on in my real estate career. To this day, it’s the biggest investment mistake that I’ve made, and it’s precisely because I didn’t follow the IDEAL guidelines that you are reading and learning about now. I was naïve and my experience was not yet fully developed. The property I purchased was a vacant lot in a gated community development. The property already had an HOA (a monthly maintenance fee) because of the nice amenity facilities that were built for it, and in anticipation of would-be-built homes. There were high expectations for the future appreciation potential-but then the market turned for the worse as we headed into the great recession that lasted from 2007-2012. Can you see what parts of the IDEAL guidelines I missed on completely?

Let’s start with “I”. The vacant lot made no income! Sometimes this can be acceptable, if the deal is something that cannot be missed. But for the most part this deal was nothing special. In all honesty, I’ve considered selling the trees that are currently on the vacant lot to the local wood mill for some actual income, or putting up a camping spot ad on the local Craigslist; but unfortunately the lumber isn’t worth enough and there are better spots to camp! My expectations and desire for price appreciation blocked the rational and logical questions that needed to be asked. So, when it came to the income aspect of the IDEAL guidelines for a real estate investment, I paid no attention to it. And I paid the price for my hubris. Furthermore, this investment failed to realize the benefit of depreciation as you cannot depreciate land! So, we are zero for two so far, with the IDEAL guideline to real estate investing. All I can do is hope the land appreciates to a point where it can be sold one day. Let’s call it an expensive learning lesson. You too will have these “learning lessons”; just try to have as few of them as possible and you will be better off.

On events my thoughts explained

Advantages of Taking Wedding Planning A Wedding Course is a very important event for every couple. Therefore, many couples prefer to rent a wedding planner to take care of all the preparations as well as arranging the wedding. Wedding planners manage all the wedding preparations for their clients. These include dresses, decorations, cakes and places for weddings. Hiring a photographer, singer and caterer for the wedding is also included in the wedding planner service. Each of these and much more must be carefully prepared in order to have a marvelous marriage. All this is taken care of by the wedding planner. It is the purpose of all wedding planners to prepare the ideal wedding for each of their clients. And wedding planning courses can help wedding planners achieve this goal. Here are the benefits of wedding planning courses. Learn how to be organized – Wedding planners can learn organizational skills. This is important because wedding planners handle many things. Organizational skills will make everything smooth. Each preparation is not dormant if the wedding planner is organized. Know the supervising skills – Wedding planners work with the crew. Wedding planning can certainly help wedding planners learn management skills. Management skills are important. This allows wedding planners to manage their crews properly to arrange marriages smoothly from the preparation to the end.
The Ultimate Guide to Planners
Improving wedding planning skills – Wedding planning techniques can be improved through wedding planning courses. They can present big wedding plans like top wedding planners.
Beginner’s Guide to Planners
High quality wedding services – Every wedding planner has his own standards for wedding planning services. Poor quality wedding planning services often happen to amateur wedding planners. The best wedding planners only provide great wedding services. Wedding planning courses help wedding planners to improve their standard wedding services at the same level as professional wedding planners. Improve your ability to interact – Wedding planners deal with many people at every wedding. It could be a couple’s family. In addition to clients, wedding planners also deal with relevant contractors. Finally, the wedding planner staff works. Everything in weddings is very stressful especially if some people are not satisfied with the preparation or have any other ideas for marriage. Wedding planners can learn how to interact with different individuals when planning a wedding. Update knowledge about trendy wedding planning ideas – Clients will always look for wedding planners who can provide popular weddings. This allows wedding planners to remain relevant in the wedding planning industry. Eligible for certification of wedding planning – Wedding planners can get certification or wedding planning license. Now wedding planners can be considered professional wedding planners with license or certification. Wedding planners have a lot of competition. Clients will always look for their ideal wedding. Taking a wedding planning course is the best way to provide quality wedding services.

Wedding Chiavari Chair : Classic Elegance of Italian Origin

The Chiavari Chair is a classic, elegant and timeless chair that has graced the world for over 200 years. Although feminine, graceful and delicate in appearance, these chairs are strong and sturdy. Utility paired with elegance. The perfect chair for an elegant affair, indoors or outdoors. The compilation above includes original Chiavari chairs and the evolution to the most common derivative that we see today in the stacking rental chair, referred to as the “Tiffany Chair”. It is no wonder that this chair has evolved into what has become known to as the classic wedding chair. I have always been enamored by this chair. Once again, it is the history and understanding that deepens my appreciation. History unites to position this remarkable chair on its own pedestal, which it certainly deserves….

The Chiavari chair is named after the coastal Italian town of Chiavari (pronounced shi-VAR-ee), from which this stunning chair originated. Chiavari is within the Province of Genoa, in the region of Liguria. Situated near the Entella River it is surrounded by mountains except on the southwest, where it meets the Mediterranean Sea. A beautiful setting from which to visualize this chair’s history. Since the year 1200, Chiavari, Italy, was known for the production of elaborately hand carved furniture. Quite the history.

In 1807, local cabinet maker and renowned craftsman Giuseppe Gaetano Descalzi (also referred to as Campanino) modeled his infamous design after several Parisian chairs were brought to him byMarquis Stefano Rivarola, Ambassador of the Republic of Genoa, founder of the Economic Society of Chiavari. (Of note, the Descalzi brothers had opened their famous furniture workshop in 1795). After returning from a recent trip to Paris, Rivarola brought back several chairs for the craftsmen of Chiavari to create quality replicas. It is said that the French design had only one crossbar on the backrest and no spindles. It was the goal of Descalzi to create a unique chair that was lightweight, utilitarian, yet possibly first and foremost, elegant. Descazi evaluated the chairs and then redesigned them, making changes to the shape of the backrest, the legs and improvements to the seat. Descalzi christened his creation “Chiavarina, or little Chiavari”. It is believed that the design was based on the Louis XV panel-back side chair, but without the upholstery. Additionally, the Chiavari chair is noted as a type of “Balloon-Backed” chair and it is also thought that the creation of this chair began with the “Bell Ringer” design (Descalzi was nicknamed “Bell Ringer”, apparently in connection with his parent’s occupation as bell ringers). Who knew?

Descalzi, indeed, succeeded in designing a chair that not only incorporated the Neo-Classical look of the period, but a chair that was practical and of quality. An elegant and sturdy design created by a visionary! The flawless design of the Chiavari chairs are easily recognizable with their spindle frame construction and ladder-like back paired with short, vertical spindles on the upper backrest. The distinctive double row of spindles at the chairs legs add to the elegance and appeal of this chair. Of note, today there is one factory in Chiavari, Italy, the Fratelli Levaggi chair factory that have been replicating these chairs by hand for 50 years (www.levaggisedie.it). Interestingly, the factory is in the same location where the Chiavari chair was originally formed. The beauty of quality,lasting craftsmanship continuing onward to today- offering the future a timeless and enduring design made by skilled hands. The power of craftsmanship!

The Chiavari chair has certainly inspired countless versions over the years. It quickly made the transition from the dining room the great halls of grand ballrooms. Since the beginning, it has been a basic at royal functions and has included many infamous individuals who have perched from this historic chair such as Queen Victoria, Napoleon and King Fernando of Spain. What a history!

Chiavari chairs have now become a staple at elegant social occasions and stylish soiree’s all over the world. Although there are many versions, the resemblances to the original are evident. The design of this beautiful chair has certainly set the standard as the premier chair for elegant banquets and weddings. These slim chairs provide spacious seating at tables, an asset for any event. The ways to adorn these chairs are countless. The options available in finishes are also countless. Today theChiavari chair can be found in several colors and materials including lightweight acrylic, bamboo, brass, steel, aluminum, resin and of course, beech wood. Stained in mahogany or walnut, metallic finishes of silver and gold, painted finishes in a multitude of solid or even bright colors, the options that this chair provides can certainly match a design palate of any stylish event. Whether the warmth of the gold or the cool modern appeal of the silver, this chair is sure to add to the attractiveness of a stellar affair.

From the beginning of the 19th century to today, the pairing of the sleek, yet delicate lines and graceful design matched with the strength of the material equates a masterpiece that has stood the test of time. Whether this chair is used at an elegant affair or found within the interior of a home, its simplicity and lightness adds an aura of classic elegance, indeed. Consider the Chiavari chair as sculpture within an interior. If you are fortunate to have acquired an original Chaivari chair, a prized asset it is sure to be. Fortunately, there is a a Chiavari styled chair in affordable price ranges for every interior. A significant, incomparable chair.