If you have ever thought about buying residential income property, but asked where the financing would come from, this article is for you. You’re not the first person to wonder that. Why not try using the money in your individual retirement account (IRA) or your 401K?

You’re probably asking yourself how that can happen. Not to worry, because there is a simple solution called a self directed IRA (or 401K). Using one of these very special accounts, you can direct your money into whatever kind of investment you like, even real estate.

You better believe there are plenty of excellent reasons to invest this way, not least of which is the fact that income taxes on the money are deferred until retirement. Your tax rate will probably be lower then, and so your money will grow fast now, AND last longer when you need it.

Next, self-directed IRA or 401K investing allows you the freedom to invest in something you are familiar with. Unlike the every day mutual funds, stocks, and cash funds most IRA and 401K money is invested in, you can actually invest in real estate in towns and neighborhoods you are familiar with.

Of course, you must follow the IRS rules for setting up such an account. Don’t worry, though, because the trustee you choose to manage the account will know the rules, and they will be able to advise you accordingly. Probably the primary rule is that the real estate must be owned and paid for completely by the retirement account, not by you individually.

Since the Individual Retirement Account owns the real estate, all money paid or received relative to that piece of property must come from the IRA or 401K, and be paid back into it. You can’t comingle funds, or write checks from your personal account. Because of this rule, paying bills can be a bit aggravating, because you need to request checks from your account holder. It can get expensive, too.

Losing money is a real possibility, and you should be aware of the possibility. Real estate my be relatively safe as investments go, but there are no sure things. Remember, however, you will be the one with the final say on where your investment dollars go. That’s what “self-directed” is all about.

Is this type of “self-directed” retirement fund investing really your cup of tea? Only you can answer that question, but consider this. Do you really want a nameless, faceless, money manager in some Ivory Tower having the final say regarding your retirement dollars? That’s what I thought you would say!

The real estate market has dropped out. Prices are falling around your ears. So does this mean that you should get out of property investing? No this is actually a great opportunity to increase your portfolio. When you are buy real estate it does not really matter where the market is, unless you are considering selling in the short term. If you are holding long term then you have to accept the market fluctuations if you can buy during a low period of a cycle that is the “golden hour” in real estate…but sometimes it is hard to find that hour on your watch.

If the market is experiencing a major downturn it is a great time to be buying due to a vast number of bargains. You can buy at rock bottom prices. However, do not get too negatively geared because this is how most investors get themselves into trouble in the first place. Go for positive gearing. In other words make sure your rental income equals or exceeds your outgoing expenses, to include mortgage payments. If you have other income you may be able to stand an extra $100 or more per month to top up the mortgage but try to avoid it. Negative gearing is ok if you have a really good income and a tax problem.

Ok we all know that in a strong market, when the prices are going up, our property value also climbs. However now, in a slower and declining market you need to change your focus to hold for a longer period. We are looking at a few years before a more friendly market for investors shows up on the horizon.

Focus on positive cash flow and steadily increasing returns. This is a long term game. Property investing is a business. You need a decent return on investment and you need the rental return to cover or nearly cover the new mortgage expense.

Having said all that, we cannot avoid the fact that with good research and due diligence the depressed market presents investors with the GREAT opportunities to build a portfolio of properties for long term gains.

Real estate short sales are not a new concept and you will hear of them more and more in our presently receding economy. Many experienced real estate investors have been practicing real estate short sales for years. For homeowners, it may be a new concept but is a very useful and interesting one.

When a homeowner is upside down in his or her mortgage, he or she will often hear people pitching real estate short sales to him or her. An upside down mortgage is when a homeowner owes the bank more than the home is worth. If the home can only be sold on the market for $100,000, for example, the homeowner is upside down in his or her mortgage if he or she owes more than that amount.

What can a homeowner with an upside down mortgage do? Even if a home is sold, the proceed wouldn’t be big enough to pay off the bank. Then the homeowner will have to pay the difference between the sale proceed and the balance of his or her mortgage out of pocket. Depending on what that amount is, the homeowner may not be able to afford it and have to file bankruptcy or something serious like that.

With real estate short sales, the lenders are willing to accept the amounts less than the actual amounts owed by the homeowners. For example, if Bob owes $200,000 in his mortgage payments and Bob cannot afford to pay them ongoing. Even worse, Bob’s house is valued at only $150,000. Bob has no choice but to do a real estate short sale or he would end up in a foreclosure or have to file bankruptcy. If the bank accepts a real estate short sale on Bob’s home, Bob walks away from the debt free and clear.

The downside is that Bob cannot stay in his home. With real estate short sales, homes must be sold to third parties. This is because if Bob’s bank knows that Bob can only afford to pay what the home is worth, then the bank will not be lenient about the extra $50,000. Besides, what’s to stop people from pretending that they cannot afford the mortgage payments to deceive the bank if it were that easy to do.

For a real estate short sales to be accepted, there must be a buyer who is not the homeowner. The buyer must be convincing enough to show the bank that it is in their best interest to accept the real estate short sale. For example, if the homeowner has lost his or her job, just gone through a divorce, has piles and piles of medical bills, then the bank is likely to see that if they did not accept the real estate short sale, they may end up having to foreclose on the home.

Bear in mind that not all real estate short sales are successful. Some real estate short sales are not and the homeowners end up in foreclosure or having to file bankruptcy. However, if the buyers and the homeowners work together to convince the banks that the situations are truly bad, the banks are likely to consider accepting the real estate short sales.

The terms “credit crisis” and “housing bust” will be forever stamped upon our generation. Many ordinary and not-so-ordinary people are suffering, and there’s a growing public discontent for the way things have been done. Some are calling for the dissolution of Capitalism in America, declaring that we finally have proof of the failings of free enterprise! The truth is quite to the contrary. This financial meltdown was largely caused and absolutely perpetuited by a series of government incursions into the economy!

There are three main groups behind the housing madness: local and state lawmakers, federal regulators, and the Federal Reserve. Land use regulations stand at the heart of the issue, with local and state legislators placing significant and often-times arbitrary restrictions on new development. In coastal California, for instance, cities largely dictate the land use policies of surrounding rural areas, restricting new development to alleviate growth in demand within the cities. This is why housing prices in Los Angeles increased at a far higher rate than those in Houston, despite greater population and living standard growth rates in Houston.

In an effort to increase homeownership amongst low-income demographics (i.e. people who cannot afford homes), the Department of Housing and Urban Development (HUD) pushed the mortgage institutions to increase the number of subprime loans in their portfolios. This was social engineering at its finest, with the results now evident. The Environmental Protection Agency is another regulator itching to enter real estate by connecting climate policy to land use regulation.

The other big player in the real estate boom was the Federal Reserve and its manipulation of the money supply. In response to a stock market crash and potential economic slowdown following the attacks of 9/11, then Federal Reserve Chairman Alan Greensplan dropped the federal funds interest rate to near zero. It almost certainly dipped into negative real interest rate territory (deduct inflation from the nominal rate), which discourages saving and signals to the market to borrow. There is no question that what ensued during the heigh of excess in the real estate boom would not have occurred had the capital not been made so easily available.

This is only a rough snapshot at how some regulations and government policies affected real estate and drove the market nuts up through 2006. As stated earlier there were certainly many private parties responsible for unethical lending practices, incompetent risk managers at large financial institutions, and just plain old greedy people who tried to take advantage of what proved an unrealistic market. Before we scream for increased government involvement in real estate and financial markets, we should seriously evaluate what caused the problems of the past. It’s clear that government played a significant part, so does it make sense to call on the same institutions to increase their involvement? Or perhaps it makes more sense to reduce their encroachment so that markets can work?

Are you thinking of investing in real estate? There is a lot of money involved in property investment so not only is there money to be made but if you’re not informed then you can lose a lot. Not only do you need access to money but there is hard work and research involved in making money in the real estate business. If you have the drive then you can find buying, renovating and reselling or renting property for a profit enjoyable and rewarding. Here are some tips to acquiring property for resale or renting.

Look for a property in the best location you can afford. The best rental and resale family homes should be close to public schools and shopping centers. There should also be access to freeways and public transportation, especially in urban areas. Contact the local police department or use tools online to find out the crime rate in the neighborhood.

Once you have done your market research and decided on possible properties, you’ll need to know as much as possible about each prospective property. While visiting the property look carefully for anything that will need to be replaced or repaired. Look for repairs that can be hidden and costly such as cracked hardwood floors, plumbing, mildew and electrical problems. Take notes and write these issues down so you can review them later.

Once you have done your own inspection and decided that a property looks like a possible investment, hire a professional inspector. Make sure to find a reputable and reliable inspector even if you have to spend more money. They will tell you what needs to be repaired, what should be repaired, and what work will need to be done in the future.

Don’t get too attached to a property. Remember, your goal is too make money on the home. Keeping that in mind will help put things in perspective and help you not to make any hasty decisions. No matter how nice you find the property, don’t be afraid to walk away from a sale.

Use professionals to help you before you decide to buy a property. An appraiser will help you determine the value of the real estate and how much it will be worth with renovations. You will also need to figure out how much renovations will cost to determine if a profit is possible.

Have your finances in order before mking an offer. Financial aid is available and should be used especially if you don’t have enough capital to invest in something that will turn a profit. Be careful though; a long term loan (such as 30 years) may not pay off if you’ll be selling it in the short term. Use an accountant if you’re unsure of the number crunching.

After you’ve completed the buying and selling of your first property you will be on your way to making real estate investment a hobby and a business.

Many people think that they can make a fortune by investing in real estate, however if you don’t know what you’re doing then it could be a very expensive lesson. Before you decide to try your hand at investing in property there are some things that you need to learn. This business requires a lot of long hard work, and access to plenty of money. If you do it right then you can make a considerable amount of money.

It’s important to know as much as you can about this subject before you start spending any of your money. When you are deciding which property to buy you should pay special attention to anything which needs renovating or repairing. It’s a good idea to take a notepad and pen with you so that you can remember any potential problems.

Make sure you thoroughly inspect the house by flushing all of the toilets, turning on the lights, checking the floorboards, inspecting the walls and ceilings for cracks. Try to check out every potential problem so that nothing catches you by surprise. Once you have decided on the house that you want to buy you should hire a house inspector to check it out before parting with your cash. This will give you a clear idea of how much money you will need to spend on renovating and repairing your property.

Make sure you also pay attention to the market which you are buying the home in. Is there a school close to it? Is it within easy reach of the freeway? Also check out the local crime rates and find how well houses sell in this area whether its a mansion in Hollywood or a cheap holiday villa in Spain.

When buying homes for an investment you cannot be sentimental, this will weaken your position. You want to buy the house for as low a price possible, if you’ve fallen in love with it and the owner realizes then they may stick out for more money. If you can play a good game of poker, then you will do very well! Just because you love a house, it does not mean that it will be any easier to sell.

If you can’t afford to buy the property personally then you can take out a loan to cover the cost. This will work in exactly the same way as if you are buying a home to live in. However if you do this then you need to be aware of the loan costs. If you take out a loan which lasts for 30 years is it possible to pay it off in full when you sell it and have a large profit? Many loans will have a penalty if you pay the loan off early. You don’t want to lose money, so you need to be careful when borrowing money to fund your home property investment business.

There are times in your life when you have to make decisions that others may question you on in order to change your future.

That is the case with investors who would want to build a rental portfolio or invest in real estate but their market is so crazy that a 2/1 shack is 200k or the taxes are so high that they cannot get a positive cash flow. So what can you do?

Look for properties in another area, or even another state, which are affordable and give you positive cash flow.

There are lots of areas that the news never talks about because they don’t have 50 percent appreciation in a year. They simply steadily grow at a measly 3 to 5 percent, and guess what When the Bubble burst they also didn’t have 50% depreciation in a year. In fact, they just hang out and many people just don’t even notice.

So what are the keys to finding a stable area that won’t blow up or down? Here are 7 steps to finding out your area properties to invest in.

1. Look for areas that have a strong rental market. Meaning an area where a good majority of houses are owned by investors who are renting property. This will tell you that the taxes are low and the rent rates are high enough to attract investors who want cash flow.

2. Find the areas that other out of state investors are buying in. Google is one way that comes to mind. Craigslist.com is also a very good source. In fact, I think it is one of the best sources to find great deals.

3. Once you find the area, talk to people there about the markets overall appreciation. Find a market that is just boring, one where no one really ever understood all of the hype about the real estate bubble because it wasn’t happening there.

4. Once you find the area that other out of state buyers are buying in, the work begins. You are not there, so someone will have to do your work for you. And the best way to find the local deals is to find the local wholesaler!

5. Just like a spy gathering intelligence, find somebody who is connected, who is the big dog dealer around, and try to get him on your side. That is what you should do to find the best deals in the area.

6. Find the hard moneylenders in the area. Guess whom they will be friendly with? That’s right, the local wholesaler. Find the moneylenders, and you will find the best deal finders. They will be the ones constantly finding great deals and bringing buyers who need to borrow the money. Easy - just like a spy!

7. Talk to the wholesaler in your area. It’s less work and much easier than working with realtors. Be sure you check and ask around, make sure he or she is the big dog, so to speak, running the volume-based business. They mark the deals up just a few thousand and move them so they can keep buying more properties. Besides, the local wholesaler is the one who gets all the best deals anyway. The one who is going to have all the relationships with the realtors anyway and get the 1st call on the deals.

On the whole, for the work the local wholesalers do - looking at hundreds of houses and making hundreds of offers to get their deals - they are more than worth the measly mark up they make. Let them find the best property mangers and contractors, and they will help you get properties - quality properties - faster, so you can achieve your investing goals.

Then it is time to get to work and do some deals, build your cash flow, and take charge of your future. Be Bold and Courageous, you won’t regret it!

I have a few tips for you on how to be successful in the rental house business. First, do some research to find out where rental homes are needed.

You need to get well informed. Find out what areas need housing. Such areas are the ones that have a lot of businesses in that city. Make sure it is a booming area, not an area where many manufacturing companies are closing and people are losing their jobs. Where this is the case, you will find families wanting to move out and looking elsewhere, where the employment is. Also make sure it is a safe area for people to raise their family. No one wants to move into an area where risks are involved. The next step is to make sure that the area is getting a high deal on rent. You don’t want to be paying for a house that is going to generate low rent. You are trying to make money, so that would make no sense. The area has to have inexpensive houses to buy with higher rent.

In order to establish the above, it would be best to get someone who can direct you in the right market. Find a person who can teach you and put you on the items you need to focus on. In order to find the right person, make sure they are in the business and know what they are doing. Do not watch a television ad or an online ad and think you know what you are doing. You will read a lot of different information on rental housing and wholesale real estate. Some information is good to know and some is fluff. You need to be taught by a mentor who can show you each step you need to take in the correct manner.

A lot of money can be made in rental houses. Once you have done the above-mentioned steps, purchase the house. Then you will need a contractor to check the house to make sure everything is tenant ready. Replace and fix things as inexpensively as you can. You also want to establish a good relationship with people and keep a good business reputation. If you are renting out homes that are unsafe or not kept up that will bring your reputation down immediately. Keeping a good reputation has numerous advantages. One example is if a renter has to move out he or she may even find a new renter for the house.

By buying your first rental property after being educated, you will be making extra income. With that income you can purchase more rental properties. The idea is to keep repeating the step over and over. At first the work is hard, stay determined, and with time the steps get easier and easier. You will find yourself very successful in dealing with rental houses in no time.

There are several investors in my area making a bunch of money. But if you asked them what their secret is, how they find their houses, you will be surprised when they say that they don’t really know how.

What they will tell you is they are not looking themselves, they let the local wholesaler find the deals. There are quite a few investors around who buy from me, a wholesaler, over and over again. Sometimes I feel like I am missing out when I hear about how much money they are making on the deals that I sell them; but that is just the way it is.

These successful investors decided that I didn’t feel comfortable selling properties to home owners, and they realized that I had no desire to make a huge profit on a deal. I just wanted to make a few thousand and do that many times each month.

Most of the investors figured out that in order for me to eat, I had to move properties. Unlike them, my full time job is buying and selling houses. They had jobs so they did not have the time to find the deals that I brought to them.

To sum up, if you want to make a lot of money in real estate yet you don’t have the time to look for the deals, buy from the guy who is selling 5-10 properties a month and runs a volume-based business. If you don’t, you will soon find out the most you will save is a few thousand bucks, but the time it will take you will not be worth it.

Taxes are a necessary evil in our society, and for many it seems natural to grouse about having to pay a large percentage of our earnings to the government while those who have more money seem to be bearing less of the burden than they ought. It’s certainly disheartening that it works this way– as the fortunate shirk their obligations through legal loopholes, the rest have to pick up their slack. It’s frustrating and unfair, and there’s no question that many of the complaints against the upper class are quite legitimate.

Complaining of unfairness, though, changes nothing. The truth of the matter is that if you have money, you get to set the rules of the game to your advantage. If not, you’re basically out of luck. Our society has worked in this way for many years, and you’re fooling yourself if you expect it to change anytime soon. The rich will continue making more more and more money, going to fancy restaurants, and living in huge houses, as everyone else struggles to make ends meet. And what about the politicians in charge? They’re rich too, and many of them are pleased as punch to watch their wealthy buddies dodge their tax obligations.

That’s why you are going to have to take action. Don’t be one of the downtrodden masses. If you want more money, you are going to have to go get it yourself. And yes, you too can get more money in the form of tax breaks.

In his Rich Dad book series, Robert Kiyosaki advocates figuring out what the rich do to be rich, and do that. Except that you don’t have to figure it out. He didn’t even have to figure it out, because he had a rich “dad” to tell him the secret of the rich: investing. Especially in real estate.

“One of the reasons I chose to work predominantly in the B and I quadrants are the tax advantages,” he says in his book, “Cash Flow Quadrant.” The cash flow quadrant, after which he named the book, is his rich dad’s diagram of the four different kinds of people, with respect to where they get their money and their philosophy about procuring money which, oddly enough, match up. In other words, people who are Employees have one set of values while the people who are Self-employed have another.

In Robert Kiyosaki’s opinion, the most money is in the business and investment quadrants, largely because these quadrants allow individuals to take advantage of more tax breaks.

You know the saying, “If you can’t beat ‘em, join ‘em.” That is good advice, especially if the guys you want to beat are the rich. It’s actually great news that they are getting so many tax breaks. That means that, when you become one of them, you will get those same tax breaks, IF you know how.

The path to riches is actually very simple; all you’ve got to do is start investing, or join the ‘I’ quadrant. If you have a high-paying job, you may be able to do this without leaving the ‘E’ (employee) or ‘S’ (self-employed) quadrants, but Robert Kiyosaki advises that you move into the ‘B’ or business quadrant, devising a system that will make you money regardless of whether you are putting time into it or not.

Investing, preferably in real estate– condos, rental property, land and the like– is your ticket to financial freedom.