This books takes a “get rich slow” view of real estate investing. It is one of the better step-by-step real estate investing books out there. The focus of the book is buying rental properties for cash flow, and the authors, Mike Summey and Roger Dawson, show you how to find motivated sellers, determine the investment value of a property based on it’s Net Operating Income (aka, cash flow), manage your properties, and more.

Because the book is aimed at readers with full time jobs and family obligations, the authors walk you through how to do everything in small bites. For example, to learn about your local market, the book shows you how to meet with real estate agents and obtain and analyze market research data so that you can find particular home types and neighborhoods to invest in, and do it all over the course of several weekends.

All in all, The Weekend Millionaire’s Secrets to Investing in Real Estate is an excellent introduction to anybody just getting started in real estate investing, and it does give you a good portion of the “book learning” you need in order to start working on your first real estate deal. You can purchase the book at most major book retailers, and online via Amazon.

For the things that the book is lacking, such as contracts, property inspection forms, and more in-depth, specialized information, the Real Estate Investor Wiki is worth looking at for filling in the gaps.

Until next time,

Jassen Bowman

Most people are probably familiar with the game Monopoly. They’re probably also familiar with the stark differences between the game and the realities of life. It’s incredibly difficult for a game or simulation of any sort to match what happens in real life. Some attempts are much better than others, and the free online simulator at Learn To Be Rich is definitely one of the better options out there.

LearnToBeRich.com is currently absolutely free. All you have to do is register for the game, and a password will be sent to you. Once you’re in the game, the array of options that you’re presented with can be somewhat daunting, so take the time to read through the options and read the tips that are on the screen during each turn, it really does help.

Every time you play the game, you are lead through the complete working life of your character. Each turn of the game corresponds to one month of real life. During each turn, you are free to take one of many, many different actions relating to your overall financial picture. For example, you can choose to focus on your career and try to get a raise, you can meet with a stock broker to look at potential stocks to buy, and you can start businesses. Every action you take has certain risks and rewards that correspond to the risks and rewards of the similar actions in real life.

The overall purpose of the game is to allow you to see the results of your financial decisions over an entire 45 year working life. The game throws in things that do happen in real life, such as the surprise stock that takes off like a rocket or the rapid increase in operating expenses for a particular business. The game models an amazing array of factors, including inflation, individual industry sector performances, housing trends, cost of living raises, marketing performance, and much more. All of these factors are based on real life historical performance and trending of the actual variable, along with the occasional random surprise factor thrown in to reflect the reality of booms, busts, good times, and tough times economically.

A recently added feature to the game is the ability to see where you stack up against other active players. You can compare ranking for bank account balances, real estate portfolio performance, net worth, and more.

The game was developed by James Orr, a professional real estate investor and Internet entrepreneur. The amazing part is that James is actually one of those rare guys that practices what he preaches, rather than just riding the seminar and infomercial circuit. James has built a sizable portfolio of rental properties, and has operated a number of very successful online ventures. The game is something that he does as a hobby to teach others the things that he’s learned the hard way. He recognizes a severe lack of financial education out there, and he says, “You can learn a lot by modeling life and making your mistakes in a game rather than in real life with real money.”

I would agree with his statement wholeheartedly, and this game is the best effort I’ve seen at providing an environment for learning this way. To check out the game for yourself, just visit http://LearnToBeRich.com.

Until next time,

_

Despite uncertain real estate prices, buying a house is still a smart choice for most families. Buying, rather than renting, replaces nondeductible rent with deductible mortgage interest. You can borrow tax-free against your home’s growing equity. And you can sell your home for up to $500,000 profit, tax-free.

Mortgage Interest

Tax-deductible mortgage interest is the cornerstone of most families’ tax planning. You can deduct interest on up to $1 million of “acquisition indebtedness” you use to buy or substantially improve your primary residence and one additional home. You can deduct interest on up to $1 million of construction loans for 24 months from the start of construction. (Interest before and after this period is nondeductible.) And points you pay to buy or improve your primary residence are generally deductible the year you buy the home if paying points is an established practice in your area.

Home Equity Interest

You can deduct interest you pay on up to $100,000 of home equity loans or lines of credit secured by your primary residence and one additional residence. Using home equity debt to pay off cars, colleges, and similar debts lets you convert nondeductible personal interest into deductible home equity interest.

Make sure you compare after-tax rates before you refinance consumer debt with home equity debt. If you can buy a car with a special interest rate, your nondeductible personal interest may still cost less than deductible home equity interest. If you can transfer a credit card balance to a new card with a low introductory rate, you could save money and avoid the paperwork needed to refinance your home.

If you pay points to refinance your home, you can’t deduct those points immediately. However, you can amortize them over the life of the loan. If you pay off the loan before fully deducting your points (including refinancing with a new lender), deduct the remaining balance the year you retire the loan.

You can still deduct the interest you pay on home equity balances over $100,000 if you use the proceeds for a deductible purpose. If you use home equity debt to buy stocks, for example, you can deduct it as investment interest; if you use it to finance your business, you can deduct it as a business expense.

Property Tax

You can also deduct property taxes you pay on your primary residence and vacation homes. Microsoft founder Bill Gates can deduct over $1,000,000 he pays on his Seattle-area compound. But be aware that property tax deductions may be limited by the AMT.

Tax-Free Income From Selling Your Home

The Taxpayer Relief Act of 1997 made important changes when you sell your primary residence. The old law, effective for sales before May 5, 1997, let you roll unlimited gains into a new home and offered a one-time $125,000 exclusion if you sold your home after age 55. The new law lets you exclude up to $250,000 of gain ($500,000 for joint filers) every two years, with no need to roll your gains into a new home.

You can exclude $250,000 if:

1. You owned the home for two of the last five years,
2. You occupied it as your primary residence for two of the last five years, and
3. You haven’t used the exclusion within the last two years.

You and your spouse can exclude up to $500,000 if:

1. Either of you owned it for two of the last five years
2. Both of you used it as your primary residence for two of the last five years, and
3. Neither of you has used the exclusion within the last two years.

You can exclude part of your gain (calculated by dividing the number of months you qualify by 24) without meeting that two-year minimum, if your move is due to:

• Change in employment (you, your spouse, a co-owner of the house, or any other person whose principal abode is in the home accepts a job whose location is at least 50 miles farther from the home than their previous place of employment);

• Health (a qualifying person or their relative moves to treat a disease, illness, or injury or to obtain or provide medical care for a qualified individual); or

• “Unforeseen circumstances” (including, but not limited to, involuntary conversion, natural or man-made disaster, or a qualifying individual’s death, unemployment, change in employment or self-employment status, divorce, or multiple births from the same pregnancy).

Taking advantage of the tax shelter over your head won’t guarantee gains. You have to consider how long you’ll own your home, the cost of maintaining and repairing it, and the eventual cost of selling it. But the “tax shelter over your head” is still likely to prove a long-term winner.