We Are In the Expansion Phase of the Real Estate Cycle?

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Like the stock market, where Bull and Bear markets occur on average every 3-to-4 years, real estate also goes through cycles only of longer duration. In the early 1930s, Homer Hoyt, a real estate economist, discovered that real estate prices seemed to ebb and flow about every 18 years. Famed economist, Fred E. Foldvary, used Hoyt’s theory to predict the real estate crash of 2008. Foldvary pointed out that the cycle does not always function on a precise 18-year schedule but should be around 18 years. One of the primary causes of the Great Recession was politicians demanding banks loosen…

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What Type of Investor Personality Are You?

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There are Six Investor Personality Types: 1) Cautious; 2) Emotional; 3) Technical; 4) Busy; 5) Casual; and 6) Informed Knowing why you make certain investment decisions can help you become a more educated investor. There are several studies that determine investor personality type. The CFA Institute categorizes investor personality types into four main groups: Preservers, Accumulators, Followers and Independents. Barnwell Two-Way Model groups investors into “passive” and “active.” One of the best studies uses Psychonomic Investor Profiling which holds that a person’s propensity to risk is unlikely to change regardless of circumstances. Psychonomic refers to the laws of science as…

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Why Smart Doctors Invest in Real Estate

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Several years ago, Dr. Robert M. Doroghazi, a noted cardiologist, wrote a book entitled, “The Physicians Guide to Investing.” Warren Buffett, chairman of Berkshire Hathaway, said it should be “required reading at med schools.” Dr. Doroghazi makes these important points when it comes to investing: (1) “Real estate should represent a significant position in every investor’s portfolio; and (2) “…real estate should be a core holding” in a person’s investment portfolio. What is it that makes real estate such an important investment that every high net worth investor, not just physicians, should consider real estate as a “core holding” in…

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Who is an Accredited Investor and Why is it Important to Become One?

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Accredited investors receive privileged access when it comes to investing in securities. So, it’s important to know if you are an accredited investor. An accredited investor is a person or business entity who is allowed to deal in securities, which may be publicly-traded stocks or private units in a limited liability company (LLC) or a number of other things, which may or may not be registered with financial authorities like the Securities and Exchange Commission (SEC) or a state securities commission. Accredited investors are entitled to view certain securities offerings if they satisfy one (or more) requirements regarding income, net…

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Real Estate Professionals Have an Advantage When Investing in Real Estate

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Real estate professionals have a distinct advantage when it comes to investing in real estate. Most people who invest in real estate have to follow what the Internal Revenue Service (IRS) calls Passive Activity Rules. These rules are found in Internal Revenue Service Publication 925. When an individual invests in real estate, it is likely that, even if you have a positive net cash flow from the property, the early years may show a taxable loss due to depreciation, which is permitted to be taken on the property. Here’s a quick example assuming you acquired a 50-unit apartment for $7,500,000…

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