Investment Articles

In the current investing climate many investors are seeking out alternatives to traditional investment assets in an effort to boost poor returns and bolster the limp performance of their pension portfolios. While stocks and shares continue to display the kind of up-and-down volatility that would make a rollercoaster jealous, real-assets including fine wine, stamps, land and forestry have all continued to grow in values as rising global incomes combine with a growing global population to boost demand against a backdrop of limited supply.

Whenever supplies of an asset are limited and demand increases, we see the value increase as buyers compete for the best assets, so those investors in control of finite resources are likely to continue to capture capital growth regardless of the performance of the wider economy.

Whilst in is certainly true that some alternative investment assets rely on the existence of wealth for their end-use market; for example stamps and fine wine rely on the existence of wealthy buyers, it is also true that certain essential assets will enjoy a demand even if the global economy were to collapse tomorrow. These safe haven alternative investments include agricultural land, energy-generating assets, infrastructure and commodity driven properties such as forestry investments.

There is a limited global stock of land suitable for agricultural production and demand for food commodities and feedstock for animal feed and biofuels in growing exponentially as developing nations expend their populace and rising incomes lead to greater consumption of commodities. Indeed the giant populations of India and China are entering their most resource-intensive phase of growth, just like the west during the industrial revolution. The difference here is that the populations and resource requirements of these countries is much larger. This makes agricultural land a precious resource that is likely to become one of the most valuable assets on earth. Not only that, but goof quality farmland produces annual income from the production and sale of food commodities, so income streams also rise as food prices increase. It is worth noting that the amount of arable land per person on the plant has halved since only the 1960’s, going some way to explaining why so many institutional investors are holding more and more agriculture investments.

Renewable energy investments that produce income from solar, wind or agricultural crops are also seen as a potentially great alternative investment opportunity as they continue to generate revenue regardless of dividend performance in traditional investment markets. As long as the wind keeps blowing and the sun keeps shining, those in control of renewable energy investment assets will continue to earn up to 20 per cent per annul income yields based on current project establishment costs.

For the long-term investor, forestry investments continue to grow in any economic weather, because the majority of financial returns is actually driven by the biological growth of trees, not the performance of the economy. Whilst a relatively buoyant economy is essential in order for there to be demand for timber products, it is growth in emerging market economies what will drive future demand, and so investors who own a stake in a commercial forestry investment property close to emerging markets are likely to capture non-correlated growth and be able to create substantial revenues from the sale of essential commodities as trees turn into valuable timber stands.

In summary, alternative investments are popular because they generate returns not dependent on traditional markets, but investors should always be careful as these kinds of real-asset alternative investment all carry asset, location, sector and counterparty specific risks that many investor may not recognise or be able to screen for, so the use of an experienced consultant with a good track record of identifying successful alternative investment assets is essential in order to avoid undue risk and maximise upside potential.

David Garner is Partner at DGC Asset Management, an alternative investments boutique specialising in property transactions in the agriculture and renewable energy sectors.

The day before Thanksgiving many of us will be preparing our homes to receive guests, or making the trek to a friend, or relatives gathering.

But the 23rd of November is D-day for the congressional debt committee.

There are many factors to consider:

Will Greece’s economy fail, causing them to no longer have credit whereby having to move to an all cash system?

What will be the outcome of the Italian issue, and its subsequent effect on the global economy?

There are many questions, with speculations disguised as answers.

The bigger question, what are you going to do about your situation? Your personal finances are just as important as the global economy because you are a part of that same deteriorating economy.

What are some of the ways you plan to protect the money you currently have from the future impending inflation, and will you still gain interest on your money? Will it be enough to either live off of, or will you use it to build for the future?

With the rocking and rolling of the stock market, should you place your money in bonds? But didn’t the analyst say the bond market is a bubble waiting to burst?

Should you move to tangible assets such as gold, silver, etc.?

Will futures be the new ‘now’ market for growing an income, or retirement portfolio?

What’s happening with mutual funds?

The answer to all of these questions is everything has a cycle. Study the cycles and you may be able to predict an outcome.

The stock market currently appears to be in a sideways pattern and with a new cycle starting around the year 2016, but what type of cycle will it be?

Are we in for a Bull or Bear market future?

Only time can really tell.

All bubbles do burst eventually, the futures market may be having gains at this time of the year, and gold’s value is through the roof and moving higher with silver riding its coattails. Mutual funds are currently stagnating, but some will gain with the shifts of the S and P.

Real Estate is still a viable consideration for investing, if done wisely. The area, growth rate, employment, and expanding or shrinking housing availability are factors when considering an investment property.

With all time lows on residential and commercial property it would only make sense to have an implemented strategy to invest in real estate.

If you decide to buy a house to rent out, check to make sure other homeowners are not doing the same thing, and if so then how many other homes will be for rent and at what price.

If you decide to invest in an apartment then check to see if there is a shadow market from residential. If a shadow market exists, how much of an impact will it have on being able to rent your units, and still being able to not only break even on the new investment but also realize a profit?

For which ever investment vehicle you are going to utilize to guard against an uncertain future, ensure you weigh all the pros and cons and make an investment choice which will work for you, yielding you appreciation in the present and future.

Knowing what you know now, would you have invested in the stock market and real estate after the crash in the early 1900’s?

As with all cycles and time, change is always on the horizon.

Please visit our blog for more information http://BackedByRealEstate.com.

323-988-7205 x 106

Investors looking to diversify their portfolios and insure their wealth against the ravages of volatility in traditional markets, will most likely have come across a range forestry investments, promising to generate superior inflation-adjusted and risk-adjusted returns for the long-term investor.

But how have timber investments performed? And how does the smaller investor participate in this interesting alternative investment asset class?

Firstly let’s look at the past performance of forestry investments, as measured by one of the main timber investment indices, the NCREIF Timberland Index; according to this basic measure of investment returns in the sector, this asset class outperformed the S&P500 by some 37 per cent in the 20 years between 1987 and 2007. When stocks delivered average annual returns of 11.5 per cent, forestry investments returned 15.8 per cent.

At the same time, returns from investing in timberland and woodlands have been proven to display a much lower volatility, an attractive characteristic for today’s investor.

Previously, the majority of investment returns from forestry investments have been mopped up by larger, institutional investors such as pension funds, insurance companies and university endowments, who have collectively placed over $40 billion into timber investments in the past decade.

So on to the second question; how do smaller investors participate in this kind of alternative investment?

According to a study by Professor John Caulfield of the University of Georgia, returns from forestry investments are three-fold;

An increase in timber volume (biological growth of trees), which accounts for some 61 per cent of return on investment.
Land price appreciation, accounting for only 6 per cent of future returns.
Increase in timber prices per unit, delivering the final 33 per cent of investment returns for timber land owners.

So the best way to harness the performance of timber investments is to take ownership of trees, either directly, or through one of the array of forestry investment funds or other structures.

Timber REITs

One way for smaller investor to participate in timber investments is through a Real Estate Investment Trust (REIT). These investment structures are like funds, in that investors can buy and sell shares in the trust on an exchange, the REIT acquires and manages timber investment properties, but unlike normal companies must pay out 90 per cent of their earnings to investors through dividends.

Some examples of Timber REITs are:

Plum Creek Timber is the largest private owner of timberland in the U.S. and the largest timber REIT with a market cap of about $5.6 billion, many investors have chosen this as their route into forestry investments.

Potlatch is also a timber investment REIT while

Rayonier generates about a 30 per cent of its REIT earnings from timber.

Weyerhaeuser has disposed of its paper and packaging businesses and will convert to a REIT by year end.

The Wells Timberland REIT is not publicly listed but may be available for purchase through Wells Real Estate Funds.

Another way for smaller investors to add forestry investments to their portfolios is to buy Exchange Traded Funds that attempt to track the performance of timber returns. This is less direct than owing timberland, or investing in a timber REIT, as the ETF may also invest in shares in companies involved in the timber supply chain including processors and distributors. This means that investing in forestry through ETFs exposes the investor to some of the volatility of equity markets.

The Guggenheim Timber ETF owns about 25 stocks and REITs involved in the global timber and paper products industry with a 30% weighting to U.S. companies.

The S&P Global Timber & Forestry Index Fund holds 23 securities and is 47 per cent invested in the U.S.

Timber Investment Management Organisations (TIMO)

Those with more capital to spare can participate in forestry investments through TIMOs, although the majority of these investment specialists require a minimum investment of $1 million to $5 million and a commitment to tie up funds for up to 15 years. TIMOs essentially trade timber land assets, acquiring suitable properties, managing them to maximise returns for investors, the disposing of them and distributing profits to shareholders.

Many experts believe that the active management style of TIMOs ensures that they can be more reactive to market conditions than REITs, and therefore don’t tend to fall and rise in line with the market quite as much.

Direct Forestry Investments

Those with access to sufficient capital and the appropriate expert advice can invest in physical properties. Commercial timber plantations are complex operations that require skill, knowledge and expertise to manage effectively and maximise returns whilst lowering risk.

For armchair investors, or those with less capital to spare, many companies offer investors the opportunity to purchase or lease a small portion or plot within a larger, professionally managed timber plantation. Investors normally take ownership of their plot and trees via leasehold, whilst the timber investment company plants, manages and often harvest the trees on behalf of the investor.

Options for investors range from species to species and region to region, with current opportunities in Brazil, Panama, Costa Rica, Germany, Nicaragua and other, more exotic locations like Fiji.

Investors should be wary as many of these direct forestry investments are frontloaded with enormous commissions for salesmen and promoters, with many offering ‘agents’ up to 30 per cent commission for the sale of plots to investors, and in many cases, no due diligence even exits.

In some cases, the Author has seen forestry investment plots in Brazil packaged and sold to investors for over £100,000 per hectare. Investor should seek advice from an independent consultant with experience of this alternative investment asset class, and who is able to present a complete suite of due diligence material, including an independent valuation of the forestry investment property on offer.

Summary

Investors choose forestry investments due to their effect as an inflation hedge, and their ability to generate non-correlated return on investment in the long-term.

Performance of the asset class is driven by demand for timber, weighed against global supplies, and in the long-term we are using timber at a faster pace than we can grow it, making timber investments an attractive asset class for the investor seeking stable, long-term capital appreciation within their investment portfolio.

Investors looking into which type of forestry investment is right for them should consult an adviser that can demonstrate experience and expertise within the sector.

DGC Asset Management Limited is an alternative investments business, identifying opportunities to invest in non-correlated assets.

David Garner is Partner DGC Asset Management Limited.

I have found that after several years of helping people purchase and manage investment properties that many investors still invest with their emotions. When it comes to building an investment property there is only one way really invest, with a cool, unbiased and rational mind. Stay detached from the process, and look at it as simply an investment, nothing more.

Let me give you an example. I advised a client years ago who wanted to get started on the residential property market. He was living in a more affluent suburb, and had a very good job that saw him earning in the upper 10-20 per cent of the population.

He had heard that investing in property was an excellent way to build future wealth, and was a secure investment. I advised him that he should buy land in the fringe of the city, and then proceed to build a new house. I explained to him that there would be minimal maintenance costs in a new property, and a new house will attract the best possible depreciation, giving the owner an advantage tax wise.

I further explained that a property in a new outer suburb will have a good chance of tenancy on an almost continual basis. The lower rental cost in these areas (commensurate with the cost of the property) meant that low to middle-income bracket families would always be willing to rent.

Unfortunately the investor disagreed with me. He argued that buying a property in his suburb, at a cost of around 4 times the cost of the house and land I was showing him, would return a much greater rental return. He did not factor in the higher mortgage cost that would be involved, nor the fact that the rental return in the suburb was actually much lower than in the outer suburb.

Worst of all though, he figured that the higher priced rental would mean that he would attract a much better calibre of client, who would care for his property, and afford him lower maintenance costs. This was an incorrect assumption for two reasons; firstly just because someone earns more money or can afford a higher rent does not make them a better person, or more likely to take good care of your property, and secondly, the existing property was older, and due to normal wear and tear, would have many more maintenance issues.

The investor went on to buy the more expensive property, and actually had trouble renting it out (the higher end market is much smaller), and at this point is looking to sell the property at a loss.

My suggestion, if one has the money to spend, would be to invest in three or four smaller priced properties. This is a much smarter path to wealth creation, and, in general, will see you much more satisfied as an investor.

The advantages of buying land in an outer suburb and building a house on it are then:

- You are adding value to the land, thereby creating wealth by actual work

- You can take advantage of tax breaks available as depreciation

- Often better rental return on this end of the market

- New equipment and fittings usually means less money to be spent on maintenance

- High demand from a larger market allows for better rental return and higher tenancy

- Finally, the lower cost per investment property allows for a sounder investment strategy of three to four properties instead of one higher priced property

If you follow the advice I have given you here you will have handled that first step of investing with a rational mind, instead of based on your emotions. Don’t buy an investment property based on where you would want to live, or based on if you like the area. Invest based on the area that will give you the best rental return, and will cost you the least in maintenance.

If you would like some further advice on this please do not hesitate to me at Dynamic8 Property Investment.

Anthony Peluso Residential Property Investment Consultant http://www.dynamic8property.com.au

Whereas not all abandoned or distressed properties would require intensive rehabbing, many properties will benefit from a touch up. The question many owners have is: what actual property tip can be most helpful in helping the underside line?

First, there are two fundamental rooms of any funding property that have to be winners for you to turn into profitable at real estate investing. The master lavatory and the kitchen are the 2 rooms which enchantment most to the client’s feelings and are the principle determinants for profit in any actual estate rehab in keeping with most real property investing program.

Kitchen

The kitchen is necessary as a result of much household time happens across the kitchen table. The kitchen may be considered as the heart and soul of a home. Husbands and wives make essential monetary choices whereas sitting at the kitchen table. Holidays are loved, politics are debated and birthdays are celebrated at the kitchen table. In short, life is played out at the kitchen table. Therefore, it’s important that households are snug when sitting on the desk as they deal with a few of the most urgent points that come up in a lifetime.

Since the kitchen is the center of feelings, this room needs to be made warm and inviting. It will not cost you as much as you may assume, and the returns can stagger your imagination.

Cupboards
Whereas you could possibly opt for custom built, brand new cabinets, there are some cost-efficient options that may improve your kitchen’s appeal without breaking the bank. Model new handles and some contemporary paint may give the impression of newness and may enhance the final appearance of your kitchen. If the cupboards really look old, you can have the cupboards re-confronted, which can price you lower than it would have to buy new ones.

Floors
At a minimum, you might want to consider a linoleum ground of good quality. To go an additional mile, tiles are a lot better. Tiles can be purchased at nice discounts at numerous major residence improvement stores. Having a durable flooring can do wonders for the value of a property, since chairs could cause injury to linoleum when scraped or pushed throughout the surface.

CountertopWhereas tile countertops can enhance the enchantment of your kitchen, having the counter as the focal point can enhance your room and put the decision to lease or purchase your home over the top.

Lighting
The importance of excellent lighting can’t be over emphasized. In case you are displaying a house, it would be useful to make use of larger wattage gentle bulbs. However, whereas doing this, be careful to not exceed wattage options of the manufacturer. When rehabbing, make sure to set up enough lighting since it makes the room look warmer and more inviting.

Main home equipment
When transferring into a new home, many individuals like to begin out by getting new appliances. If your property has model new appliances, even if they aren’t top manufacturers, will probably be more desirable to a potential renter or buyer than one having outdated appliances, or none whatsoever. If you’re planning to keep up the property as a rental, you might choose not to invest money in new appliances.

The Lavatory
While men are seen as disinterested about where they bathe, the truth is that they’d admire a pleasant rest room as much as their female counterparts. Thankfully, lavatory renovations do not need to value much to have a major impact on the appeal of this vital room. Examples of price-effective installations and repairs are things like tile floors, countertops and double-welled sinks, along with satisfactory vivid lights to assist girls make themselves up in comfort. To accommodate individuals with massive our bodies, it will be useful to consider ‘huge-physique’ bathroom stools and bathe stalls that aren’t tucked into very tight corners or constructed very near walls. Whereas smaller corner stools or shower stalls can give common-measurement people a temporary feeling of claustrophobia, it won’t work in any respect for plus-sized people.

No effective property rehab plan is complete with out guaranteeing that the rest of the home is clean, attractive and ready to be occupied. You don’t must spend a lot on these modifications, and you can be surprised at the improvements you’ll be able to achieve with a couple of superficial repairs. A new coat of paint in some components of the home, along with new light, electrical covers, clear carpet, and other small repairs will improve the property’s appearance, in addition to its visual appeal.

When you make these repairs, the demand on your investment property is prone to skyrocket, enabling you to command greater costs from potential buyers. Chances are you’ll opt to hold out the repairs yourself or have a contractor deal with them for you. No matter your alternative, be sure you begin your rehab properly by following these guidelines. You must also ensure that you purchase your rehabbing supplies from vendors who will allow you to save some money and thus enhance your profitability.

Invest With Passion is a real estate investing, money, and lifestyle blog.

With all that is happening in the U.S. and the world today, I thought I’d share the views of noted economist, A. Gary Shilling.

Shilling’s known for calling it as he sees it. In his most recent INSIGHT newsletter Shilling sounds a note of strong pessimism, but thankfully also gives us some direction on how to position our portfolio for what he sees as a sluggish economy ahead.

Economic View

Shilling believes the economy is going to get much worse from here on out. In fact, he is pretty sure we’re headed for another recession in 2012 and perhaps another decade of flat GDP growth. The reasons he cites are high unemployment and federal deficits here at home, regional conflicts abroad, and increasing global unrest.

Shilling also lists nine well-formulated reasons to support his pessimism, but we won’t go into that here. Suffice it to say that his reasons do hold some merit.

Shilling’s List – What To Sell

1. Sell U.S. Home Builders. Shilling believes this sector has over-binged, that home prices could still drop another 20%, and recommends selling home builder stocks if you own any.

2. Sell Realty Investments. He urges real-estate investors (Steve: such as some of my listeners that have second homes and investment properties) to get out now before prices drop further and you’re stuck in a market with no liquidity.

3. Sell U.S. Bank Stocks. Shilling thinks regulatory uncertainty, gridlock in Congress, and underwater mortgage loans will weigh heavily on bank stocks.

4. Sell Commodities. He believes commodity prices are bubbles that will soon pop because of sharply reduced demand in the weakened global economy he’s predicting. He also believes there’s far too much speculation in commodity prices that is removed from reality, and this cannot continue when fundamental demand drops.

5. Sell Emerging Markets’ Stocks. With low returns at home, U.S. and European money has driven up emerging markets’ stocks to unsustainable levels. He sees a correction coming as weak demand from U.S. and Europe grinds emerging economies to a stop, with China most at risk.

Okay – good to know and imbibe into our investment decision-making subconscious mind. Now let’s see what he wants us to buy.

Shilling’s List – What To Buy

1. Rental Apartments. Okay… so he’s negative on housing and thinks the American dream of homeownership has temporarily gone awry (Steve: remember – his thoughts, not mine) so he suggests investing in rental apartments because more Americans will be renting, on tighter budgets that favor apartments. (Steve: in the rest of the world, more people rent and live in apartments than own single-family homes.)

2. North American Energy. Very simply, with increasing conflicts in oil producing nations (many run by oppressive dictators or monarchs), America plans to reduce its dependence on foreign oil. And since America has a voracious appetite for energy, U.S. energy producers will do well over the long run.

3. Income-Producing Stocks. According to Shilling, the stock market’s gone nowhere over the past 12 years. So he recommends income stocks – utilities, drugs, telecom, preferred shares and the like. (Steve: I agree in that it’s important to have dividend stocks in your portfolio.)

4. Treasury Bonds. Despite all the naysayers, Shilling lays his trust in America. He thinks Treasurys will offer a safe-haven in what he sees as a coming deflationary storm.

5. The American Dollar. And he believes the American dollar will hold its value way better than most other currencies.

So, the good news here is that Shilling isn’t asking us to get out of stocks altogether. He’s just asking us to rebalance our portfolio to play it safe, should his forecast become reality.

Now remember, the list above only reflects one man’s views. So after you read this, please do not rush off to call your broker and execute these trades. Heed Shilling’s advice, talk to your financial advisor, and let your collective best judgment prevail.

If you want to act on nuggets of his advice that make sense for your portfolio then I suggest you use ETFs, futures or indexes that give you the upside while minimizing your downside.

Shilling paints a kind of worst-case scenario. In response, the best investors do not bury their heads in the sand but analyze such points of view – so they can ready themselves should calamity strike. The best also know that no one can predict with certainty what lies ahead. So they keep themselves informed but don’t get overly alarmed or influenced by any one.

So keep a balanced view and a cool head, and invest for the long run.

Visit http://onthemoneyradio.org for weekly commentary and money advice that covers the entire financial spectrum which also airs on my weekly radio show, “On The Money!”

Steven L. Pomeranz, CFP is a 29 year investment management veteran and host of “On The Money!” which airs on NPR station, WXEL in South Florida. He concentrates on serving high net-worth individuals and has been named one of the Top 100 Wealth Advisors 2007, by Worth magazine (October 2007 Issue), honoring America’s premier financial and wealth strategists.

For many people the thought of handing over their new investment to a property management company on the Gold Coast or anywhere else is just not something they are willing to do. “This is my property and I’m the only one who can look after it properly” they say. “Why should I go the expense of finding a property manager when I can do it all myself; after all, it’s not rocket science is it?

Every new investor probably has these conversations with themselves and their family and I have a lot of sympathy for this point of view.

The Gold Coast has a bad reputation for dishonest property hustlers that was earned in the 1980’s and 1990’s. Once a region gets a bad reputation it’s hard to shake off. When you consider these hustlers were offering to fly people to the Coast from Melbourne or Sydney, give them a tour of available investment properties, introduce them to lenders and solicitors, get their signature on the mortgage documents and fly them back home. And all of that on the same day! All of this took place within just a few hours and was a carefully orchestrated high pressure salesmanship routine.

Frequently these decisions to purchase Gold Coast properties resulted in financial hardship for the investor. Oftentimes the price of these properties was heavily inflated. The hapless victim of these practices did not have the time for careful due diligence, nor did they have the time to fully reflect on their decision or discuss with a partner or professional person back home.

Fortunately these days are over. The property market in Queensland is now as heavily regulated as the rest of Australia. Further, the market on the Gold Coast is a good 20% down on where it was 2 or 3 years ago and is now ripe for the picking according to many experienced property commentators.

If you are from out of town, you can safely leave your Gold Coast property investment in the hands of experienced property managers who know the coast like they know their back yard.

After all it makes sense to hand over the care of your property to someone whose only role is to make sure you are well looked after. Someone who can find you the right tenant, check references, screen applicants on the National Tenancy Database and find an emergency tradesman if you need one. These are not the sort of activities you can easily take care of if you live in another state.

Of course you could take care of your own property management on the Coast if you want. It’s up to you. For me, I’d rather get on with my own business. Remember the old saying. The lawyer who represents himself has a fool for a client.

Mal Rawlings together with his wife Tracy Rawlings are dedicated to property management on the Gold Coast, in Queensland Australia.

Property Management Gold Coast

It’s important to establish a safe and dependable investment strategy if you’re trying to build a nest egg that won’t crack. But losing their life savings through investments that looked safe is what happened to millions of Americans last year. When companies failed, there are cases where people not only lost their jobs, they lost their pensions as well.

What would be a safe place in which you can put your money? Analysts say yes, but it’s important to learn a few facts first.

For instance, real estate has long been known as a secure, tangible investment because it generally appreciates over time. There are a lot of would-be investors that aren’t experts on real estate and they don’t have the money to fund the purchase of an investment property or fix up a rundown home. But another strategy is available. It’s called cash flow investing and it allows people to benefit from secure and profitable real estate investments without buying or selling properties.

Put simply, a real estate cash flow note is a private mortgage created between two individuals instead of between a buyer and a bank. One in 13 American homes is sold this way and this is something many people are not aware of. Similar to banks that buy previously created mortgages, private individuals can build returns of 20% or more by buying cash flow notes. Any ideas how this works?

Let’s say I sold a house for $100,000 and my buyer had $50,000 to use as a down payment. What I can do is draw up a contract taking $50,000 down and finance the remaining $50,000 over 30 years. What I now have is a cash flow note and each month, it would generate monthly payments of $299.78 secured by real estate.

As a note holder, I have two options. Either I sell the note to another investor for instant cash or I can take advantage of the monthly income and interest. This is where you, as an investor, come in to make money. As an investor, let’s say you can invest $35,000. I don’t want to wait 30 years for my money so for $35,000, I’ll sell you my $50,000 cash flow note. Buying notes at great prices is what many investors are able to do because the original note holder wants to cash out. You’re now in a position to make a 30% return on your investment even before interest and you’re receiving a steady income of almost $300.

Best of all, unlike stocks and bonds, your cash flow note investment is secured by real estate-one of the most solid investments in the world.

For more mortgage tips visit Djon Karter’s blog.

Suggestions that NRAS (National Rental Affordability Scheme) budgets would be reduced have not eventuated and the scheme to subsidize owners of approved investment properties in Australia will remain fully funded in the 2011 Federal Budget announced by Treasurer Swan. This provides surety for real estate investors and developers who might hesitate to invest in an otherwise fragile property market.

One of the biggest fears investors in Australian Real Estate face is the impact of not having a tenant for a period of time to provide the necessary cash flow to maintain mortgage payments. The NRAS property subsidies are a way to protect your income that is unique to Australian Real Estate. The Swan Budget has ensured that investors will continue to get the government real estate subsidies for the ten year period originally announced.

The continued funding also means that developers can continue to invest in NRAS approved new developments knowing that there is a ready market for the homes they build. The government recognises that the NRAS funding benefits renters, investors and developers and provides jobs for the building industry.

A key feature of the NRAS (National Rental Affordability Scheme) for Australian Real Estate investors is the guaranteed tax free government payment each year. This amount of $9,140 is paid to investors each year in return for the owner accepting a lower level of rent from the tenants. What this amounts to is a guaranteed, tax free payment in return for giving up non-guaranteed taxable income. A no-brainer really.

This guaranteed government payment is unique to Australian Real estate investments and is in addition to one of the most generous tax incentive environments in the world. Real Estate investment in Australia is treated by the ATO as a business. That means that every expense related to your property investment is tax deductible, including travel to inspect your property and the building and any contents are also depreciated and the depreciation amount each year is also tax deductible.

The Australian Real Estate market has proved to be one of the most resilient in the world not only because of the ongoing government support but also because of the population demographics. Australia’s population is growing and moving. Moving because the baby boomers are looking for better retirement options and because of the huge demand for labour from the booming mining industry. Coincidentally both of these factors are driving population movement into Queensland which already has a shortage of housing compounded by the flood events this January which destroyed or severely damaged 1000’s of homes.

The cap on the number of properties to be subsidised remains and the cut off date for new investors has not been moved.

More information on NRAS property investments is available at http://www.nras-property.com.au

Two of the three states that have the highest return on investment for tax lien investing are not even tax lien states. They are the redeemable deed states Georgia and Texas. What makes them so attractive to lien investors are the high interest rates and shorter redemption periods.

In these states the interest rate is not bid down, instead the price of the deed is bid up. And unlike lien states where if you do pay premium for the lien, you do not always get your premium back (this depends on the state). And if you do get your premium back when the lien redeems, in most lien states you do not receive interest on the premium. However in Texas and Georgia in order to redeem the deed the delinquent tax payer must pay the penalty on the total amount the investor paid for the deed. So the investor gets his or her original investment back plus 20% (in Georgia) or 25% (in Texas).

The redemption times are also shorter than most lien states. In Georgia the redemption time is one year and in Texas on non-homesteaded and non-agricultural properties the redemption time is only 6 months. Contrast that to the higher tax lien states – Illinois and Arizona have redemption periods of 3 years, and Florida and New Jersey have redemption periods of 2 years.

The drawback to investing in these states is that they do not have online tax sales. Unlike some Arizona counties and most Florida counties, you have to show up to bid at the tax sale. So how can you take part in these highly profitable tax sales without spending too much money on travel to do your due diligence and attend the tax sale? There are actually a couple of ways that you could invest in these states without having to travel to them.

While you have to physically show up at the tax sale, or have an agent show up for you, you can do most of your due diligence online for the properties in the tax sale. Many of the counties now have online resources that let you look up the tax assessment data online, do a title search online, and even get a description and picture of the property. You can also find a local realtor who knows the area and can drive by the properties and take pictures of them for you. They can even go to the tax sale and bid on the properties for you. You do have to have someone physically bid for you at the tax sale, but it doesn’t have to be you that does the bidding. You can find a realtor who will do this for you with the understanding that if you purchase a deed and wind up with the property they will be the one that will get the listing.

Anther way to participate in these tax sales without traveling to Texas or Georgia is to use a tax investing agent who specializes in investing in these states. A tax lien investing agent will invest your money for you. They will set up an account for you, purchase the deeds in their name and then assign them to you. Some agents are able to do this with money from your self-directed IRA. When they use money from your retirement account there are more guidelines that they have to follow in order meet requirements from the IRS and your IRA custodian. They will have to submit a report at least annually showing where your money is invested and how much profit has been made.

Platinum Investment Properties West is a tax investing agent that specializes in investing in liens in Illinois and redeemable tax deeds in Georgia and Texas. You can even specify which state or states you want to invest in. On Wednesday, March 9th I hosted a free webinar with Don Fullman and Charles Sells, co-founders of PIP West. Find out more about investing in the most profitable tax lien state and the 2 most profitable redeemable deed states with an experienced tax lien investing agent.

Here is a link to the replay of this webinar: http://www.TaxLienLady.com/PIPwest-Mar2011/PIPwest-Mar2011.html. Joanne Musa works with investors who want to reap the rewards of investing in profitable tax lien certificates and tax deeds. Her tax lien investing articles appear all over the Internet. Tax Lien Lady’s Member’s Area is designed to help you navigate though the steps to building a profitable portfolio of tax liens or tax deeds. With 3 full courses, dozens of videos, and monthly webinar training, you’ll quickly move forward on your journey to tax lien investing success! Join us at www.TaxLienLady.com/Membership.htm