Real Estate Title Holding - Part Two

Real Estate Title Holding - Part Two
Partnerships

As the name suggests, partnerships consist of two or more
partners who join together to acquire, operate and hold
real estate. It's an effective way of pooling capital and
talent. A key feature of a real estate partnership is that
the investors don't actually have the title or ownership
directly in acquired properties. Instead, they own a
partnership interest.

Partnerships usually take two forms—general and
limited.

General Partnerships

In this setup, each partner possesses the right to fully
participate in property management and operations.

General partnerships have the following advantages:

They're easy to set up and maintain. You don't have to
register with your state and pay fees, as you do to
establish a corporation or limited liability company (LLC).
You can file income tax returns with relative ease. This is
because a general partnership is normally a "pass through"
tax entity. This means the partners, not the partnership,
are taxed. Unlike a regular corporation, there's no need to
file separate tax returns for the corporate entity and its
owners. General partnerships offer flexibility. Partners
are able to set their responsibilities and benefits as they
see fit or as the needs of the business dictate. The
flexibility extends to distribution of profits and losses.
So, for example, an individual partner can reap higher
profits for taking on more financial risk.

A partnership is considered a "discrete' asset. Because of
this, it can be transferred to other people, heirs, or
estates unlike a sole proprietorship. Transference is
usually limited by the terms of the partnership agreement.

There's one primary disadvantage of general partnerships:

One business-related act of a partner can make all partners
legally liable for that act. So it's important that you
enter into partnerships only with people you trust. Then
back up that trust with a written partnership agreement
that establishes the following: each partner's share of
profits or losses, day-to-day duties, and what happens if
one partner dies or retires.

Limited Partnerships

This ownership form differs from a general partnership in
the role and responsibilities of the partners. It consists
of one or more general partners and one or more limited
partners. Typically, the general partners run the
operations of the business while the limited partners
provide capital and help arrange financing while not taking
an active role in running the business. In return for their
investment, they receive a share of the profits for their
involvement as limited partners.

Statutes regarding limited partnerships vary by state so
you'll have to check with the appropriate government agency
for a definition of the obligations and responsibilities of
partners in this type of business arrangement. The
partnership is required to file with the secretary of state
and must also file various reports.

A key feature of a limited partnership agreement lies in
the area of liability, which falls on the general partners,
and typically not on the limited partners. For this reason,
individuals are reluctant to be general partners.

The general partner of a limited partnership can itself be
a corporation or LLC to lessen liability issues. However,
this doesn't mean that a limited partner can't be part of,
or have a vote in, major decisions that affect the
partnership.

Here are the advantages of a limited partnership:

As a limited partner, you can invest even though you don't
have expertise or the time to devote to being a hands-on
part of the business. You can take on the financial risk
but not the liability risk. Partners are able to allocate
profits, losses and gains as they see fit, regardless of
the equity interest of a specific partner, subject to
compliance with tax laws. The general partners prepare an
IRS Form 1065 for the partnership. Each partner then
prepares his or her own tax form listing all profits,
losses and depreciations. It's a "pass-through" operation
with profits passing through to the partners who then
include their allocated income on their personal tax
returns. It's much easier to attract investors as limited
partners. It allows general partners to use their
expertise, make key decisions and manage the business.
Limited partners can leave the business or be replaced
without the need for the limited partnership to be
dissolved.

Disadvantages of a limited partnership include the
following:

Filings, formalities and state requirements mean a lot of
paperwork. If you're a general partner, you assume personal
liability. Limited Liability Companies (LLCs) This is
hybrid form of ownership that combines the properties of a
corporation and partnership. It has several advantages: It
provides the flexibility and tax advantages of a
partnership while maintaining the limited-liability
benefits of a corporation.

Like a corporation, an LLC is a separate legal entity that
limits the liability of its members. However, it has the
tax benefits of a partnership. LLCs are also free of many
of the legal requirements that govern corporations
(including annual reports, director meetings, shareholder
requirements and so on). LLCs are a "pass through" tax
entity, which means company profits and losses are passed
through the business and taxed solely on the members'
individual tax returns. Members can hire a management group
to run the LLC. This group can consist of members,
nonmembers, or a combination. Members can split profits and
losses any way they wish. Dividend distribution is
nontaxable, unlike an S corporation, where dividends are
taxable. An unlimited number of members may join a single
LLC, and most states allow single-member LLCs. An LLC may
affiliate with other businesses, unlike an S corporation,
where that ability is limited.

Disadvantages of LLCs include the following:

Costs can be greater. Some states impose income or
franchise taxes on LLCs or require LLCs to pay annual fees
to operate in that state. Lack of legal precedent. Because
LLCs have existed as legal business entities only since
1996, there's not much legal precedent available to help
owners predict how legal disputes may affect their
businesses. Every state has its own requirements so check
with an attorney who specializes in LLCs before deciding to
form or join a limited liability corporation.

In the next and final installment of this series, I will
discuss corporations. Both advantages and disadvantages.

Jack Sternberg

----------------------------------------------------
Jack Sternberg is a nationally recognized expert on real
estate investment and the creator of the renowned "Buyers
First Program" who's been in the business for more than 30
years. Jack Sternberg's deals have totaled over $750
million and he's been to the closing table more than 1,500
times. For more, visit http://www.askjacksternberg.com

Don't Overpay for Your Home Loan

Don't Overpay for Your Home Loan
WHAT interest rate are you paying on your housing loan? If
you are paying 3.5 per cent or more, you might be
overpaying. With the US Federal Reserve cutting interest
rates, the Singapore Inter-bank Offered Rate, or Sibor, has
been on a downward trend. Sibor is the rate at which banks
lend to one another. Currently, the three-month Sibor has
fallen to about 1.4 per cent, down from about 2.5 per cent
last year.

Banks have started lowering interest rates offered on
housing loans to as low as 2.08 per cent. Thus, if you're
paying an interest rate of 3.5 per cent or more, it might
make sense for you to refinance your housing loan to enjoy
interest savings. If consumers hold the view that interest
rates are likely to fall, choosing a housing loan package
pegged to Sibor would enable them to automatically enjoy
lower interest rates as Sibor moves lower.

For example, if your outstanding loan is $500,000 and
you're currently paying 3.5 per cent interest with a
remaining loan period of 20 years, the total interest
savings for the next three years from refinancing can work
out to $13,831.38. After factoring in the cost of
refinancing, the net interest saving still works out to
$13,331.38. Thus, by refinancing, you can be 'richer' by
over $10,000.

Floating rate vs Sibor/SOR pegged packages: Each bank will
usually set its own board rate and after deducting a
'discount factor', arrive at the floating (adjustable)
interest rate charged to clients. The problem is that each
bank will set its own board rate arbitrarily and there
might be occasions when Sibor rates fall, and banks don't
reduce the interest rates charged on floating (adjustable)
rate packages. Thus, in a bid to increase the transparency,
some banks have recently introduced housing loan packages
with interest rates pegged to Sibor or Swap Offer Rates
(SOR).

The advantage of such packages is that as and when
inter-bank offer rates move up or down, your interest rate
would be adjusted as well - it would not be at the bank's
discretion. Currently, Sibor/SOR have fallen below 1.4 per
cent and interest rates charged on such loans can be as low
as 2.08 per cent.

With the US expected to continue cutting interest rates in
the next few months, Sibor is expected to remain low or
even fall further in the next six to 12 months. Thus, if
consumers hold the view that interest rates are likely to
fall, choosing a housing loan package pegged to Sibor would
enable them to automatically enjoy lower interest rates as
Sibor moves lower.

Beware: Fixed rate packages typically come with lock-in
periods. Some banks recently also adjusted interest rates
charged on their fixed rate packages downwards to an
average of 2.58 per cent for the first three years.
However, such packages come with a penalty period of three
years. Thus, such packages might not be suitable for
consumers who intend to sell their property within the next
three years, as they are liable to a penalty fee.

Should you apply for a housing loan now for properties
purchased on a deferred payment scheme? You might have
purchased a property on a deferred payment scheme and only
need to take a loan when the project gets its Temporary
Occupation Permit (TOP), which might be in 2009 or 2010.
Should you apply for a housing loan now? By applying for a
loan now, you eliminate the risk of loan rejection should
there be any adverse change in your financial situation in
future, for instance, a pay cut or job loss when the
property is ready. You also eliminate the risk of banks
granting a lower loan quantum should the property market
turn and prices fall. To safeguard your interests, you can
choose a loan package that allows you a free loan
conversion so that you can switch to a better package
should one be available nearer TOP.

Cash in on your property without selling it: With property
prices having gone up in the past three years, you might
now own a property whose value has doubled. In that case,
your current debt-to-asset ratio might have fallen
considerably. For instance, say you bought a $1 million
property three years ago and took an 80 per cent loan, or
$800,000. Currently, the loan outstanding is about
$750,000, while the current value of this property might
have gone up to $2 million. This means your current
debt-to-asset ratio is only 37.5 per cent. How can you
benefit from the rise in the property price without selling
your property? You can consider taking an equity loan on
the property. For instance, in the above example, subject
to your credit score, banks might grant you an additional
equity loan of up to $850,000. To be conservative, you can
consider taking up a lower equity loan of, say, $450,000,
bringing your debt-to-asset ratio to a comfortable 60 per
cent. You can use the $450,000 equity loan granted by the
bank to start a business, or even to invest in another
property. The interest rate on equity loans in Singapore is
very low and can be as low as 2.2 per cent currently.

Should you pay off or reduce your housing loan?: The
Singapore government has projected the inflation rate in
2008 to be about 5 per cent. On the other hand, the
interest rate on housing loans is about 2.2 per cent. Thus,
we have a rare scenario of negative interest rates, that
is, a person who takes a housing loan is actually ahead of
someone who saves money in bank deposits because of the
shrinkage of money from inflation.

On the other hand, interest rates on bank deposits have
fallen to about 1.5 per cent. With inflation at 5 per cent,
it means that a consumer is losing 3.5 per cent a year by
putting money in bank deposits.

Instead of paying down your housing loan which charges low
interest rates of less than 3 per cent, you can consider
investing your cash in a stable investment that is not
subject to large price fluctuations and offers higher
returns than fixed deposits. One example is UK-traded
endowments, which have a guaranteed cash value and generate
annual returns of 6-8 per cent.

How to choose a suitable housing loan?: There are over 113
different housing loan packages available in Singapore at
any one time. Each package has its own unique features,
with its own pros and cons and different terms and
conditions. Consumers might be confused by the wide array
of choices. In the last few years, with the emergence of
independent mortgage brokers in Singapore, home loan
shopping and comparison have been made easier.

Basically, an independent mortgage broker who knows your
requirements can help you zoom in on the most attractive
home loan packages suitable to your needs. You typically do
not have to pay for the service of a mortgage broker as
banks pay them a fee.

In more advanced countries such as the US and Australia,
people usually apply for home loans through a mortgage
broker rather than go to the bank directly. In Singapore,
many people are still unaware of the services and benefits
of engaging a mortgage broker, but things are likely to
change with public education and increasing awareness.

----------------------------------------------------
About The Author: Dennis Ng is a Certified Financial
Planner with 15 years of Bank Lending experience. He is
known as a Housing Loan expert and often quoted in
newspapers. He founded http://www.HousingLoanSG.com - a
leading mortgage consultancy in Singapore. You can send him
your comments to dennis@HousingLoanSG.com or call him at 65
6737 8801.

Learn How You can Exit your Forex Trading Transactions at the Best Price Levels

Learn How You can Exit your Forex Trading Transactions at the Best Price Levels
In previous articles in this series on no stop, hedged
Forex trading we covered "Forex trading without stops" and
"Forex trading not caring which way the price moves". Below
we are going to cover what we regard as the most difficult
aspect of Forex trading: - When to exit a Forex trade.

How often have you exited a Forex trade positively and then
looked on as the price travelled another 100 pips in the
same direction? Alternatively how often have you tried to
squeeze the last 5 pips out of a good Forex deal and then
watched as the price retraced all the way back to your
entry or even beyond? We have found this area of knowing
when to exit a forex trade, one of the most frustration
parts of trading.

When you enter a Forex trade all the trading signals are
aligned and you can tick all entry criteria on your
checklist. That is why the entry is the easy part. You are
entering on your terms. When the price takes off in its
intended direction it enters a mystery zone where you are
dependent of the volatility of the move for the Forex
transaction to succeed. You very seldom have reference
points. When to cash in, or not, is always the question on
every traders mind. The fact that the price likes
revisiting previous support or resistance makes this even
more challenging.

It gets worse on Forex trading deals that go negative. You
are 30 pips down. Do you close the deal at a loss or do you
wait for a small retracement to reduce your loss? Surely
the price has gone as far as it can go?

It can't go more negative? Then suddenly (oops) the deal
goes even more negative. You start thinking: "I've lost so
much another 20 pips can't hurt I'll give it more room".
And so on. We've all gone through that at some time.

With Grid trading you don't have that problem. You would
divide the expected trading range for a particular currency
for the next say 6 months (say 4000 pips) into grid levels
with gaps of say 200 pips. Now the guesswork of when to
cash in your positive deals is taken away. Every time the
price touches a grid level you cash in your positive deals.
It is as simple as that. As soon as the total of the deals
you started with is positive, you close all your deals
positively and start again. How simple can trading be? No
ifs, buts or maybe's. That is why you don't need charts.
You trade price levels, with no stops (Because each price
level has a buy and sell active) and you don't care about
which direction the price moves.

This also answers our question of when to enter a Forex
trading transaction. You would use the same price levels
that you use to exit profitable deals (as determined above)
as the entry levels for your no stop, hedged, Forex trading
grid system strategy. The process of determining the price
levels is very important as some trading groups are
reporting gains of one thousand percent a year on capital
employed using this Forex trading technique.

The above way of determining grid levels is an example. As
you will see in future articles grid levels can be designed
to meet the trader's requirements in many more ways. For
more information (which is freely available) on this great
trading system why not search the web for "no stop Forex
trading".

This is the third in a series of seven articles on the no
stop, hedged, Forex trading technique which will be
presented in this article directory on an ongoing basis.
Ensure that you do not miss any of them in order to get the
complete picture.

----------------------------------------------------
Learn how you can make money from Forex Trading by tapping
into David Lloyd's experience by visiting
http://www.forextrading-alerts.com/GRIDSystem.html or
http://www.forextradersupportservices.com/GRIDSystem.html

David and Mary McArthur have written a number of articles
on the no stop, hedged, forex trading grid system.

Alternatives to Fairyland

Alternatives to Fairyland
'Why don't you move to Russia?' That used to be the call
that you would hear in England, back in the 1960s and '70s,
every time that anyone criticised the country, the
government, or the way of life. The implication, of course,
was that if you didn't like the way things were done, why
then, you'd better move. Get out of here, and don't come
back, was the message. If you hated living here, was the
assumption, then you'd be better off somewhere else,
preferably somewhere far away. Of course this is ludicrous.
Just because Britain might be the greatest country in the
world, it doesn't mean that there aren't things about it
that can't be improved.

Personally, I love England. It always reminds me of a
Never-Never place, a real fairy-tale country, that is
completely divorced from reality. The most recent thing is
the failing economy. All the newspapers are full of stories
like 'Are we heading for a recession?' Are they for real? I
studied Economics as a teenager and I didn't learn much,
but the one thing I remember is the concept of Economic
Cycles. The economy goes up, it goes down. It's been that
way since records began, way back in the eighteenth
century. Is anyone seriously saying that 'things have
changed', 'uh, it's not like that anymore'? Of course we're
going to have a recession, maybe not today, maybe not next
month, but the economy goes up and down, every student
knows that. So if it's been going up for a number of years,
then yes, we're due for a downturn. Actually, overdue. Is
there any question about that? Well, yes. In England,
so-called professional commentators seem to be living with
the illusion that the boom can go on for ever. How much of
a fairy tale is that?

When I was a kid, I used to listen to a show on BBC radio
that was aimed at children. It was called 'Toytown'. I
don't remember much about it, but I remember Larry the
Lamb, a model citizen, always taking his complaints to the
Mayor. 'Good morning, Mr Mayor', says the lamb, (in a
sheepy kind of voice). 'Good morning, Larry', says the
Mayor, 'and what can I do for you today?' The answer to
that, of course, was that the Mayor was supposed to solve
all of Larry's problems. Well, yes, it worked for Larry,
and who knows, the Mayors of England may still be able to
tackle all of the sheep issues around. But somehow the
country hasn't grown out of the idea that it's all
solvable. Whatever your dilemma, take it to City Hall and
they'll sort it out. Well, boys and girls, that's actually
quite a childish concept and not fitting for the real
world. It's an illusion, just like the idea of no more
recessions. Okay, we haven't had a total economic decline
for almost a generation. That doesn't mean it won't ever
happen again, or that we're not due one, right now.

Another fairy story is about property. People in Britain
have bought into the idea of being 'home owners', (in
reality, mortgage owners ' the banks and building societies
own the houses). There's a kind of 'life plan' that sees
young couple struggling for years with a mortgage they
can't afford, trying to buy a small house which they hope
will grow in value. If it does, they'll be able to sell it
and buy something bigger, maybe a bigger house with a
garden, where their newly-arrived children can play.
They'll sell that place and move to something bigger. The
culmination of all this 'trading up', is that they plan to
arrive at retirement time with the kids having left home
and them being the proud possessors of a large, detached
house. They can then 'trade down', which means selling up
and moving to something smaller, maybe a bungalow, and
pocketing the cash difference, money that will see them
safely through retirement.

It doesn't work. Firstly, interest rates have gone up,
which means mortgage repayments are moving into the realms
of 'unaffordable'. Some people are having to give up the
game, sell up and rent. Meanwhile, house prices have risen
so far that new people can't even get onto this rising
ladder. With no new 'first time buyers', all sales slow
down. If you can't sell the one you're in, you can't buy
another to move into. The cycle slows, then stops. Worse,
people at the end of the line are finding that prices have
gone up so much that there are no cheap bungalows for them
to acquire when they sell their 'big house'; the two
properties are practically the same price. They make no
money, no spare cash. Even worse, they can find no small
houses in their area. They want to 'downsize', they'll have
to start again in a new area. Few old people want to be
uprooted so drastically. So they stay put, struggling to
meet the bills of their big, old house, with no spare cash
to pay for the treats and travel they had planned for their
retirement.

Astonishingly, despite all the evidence that the plan
doesn't work, very few people have the wit or the nerve to
get off the train. They stick with the fight to pay the
mortgage, hoping now that their children will benefit,
inheriting property that will sell and make them rich. It
doesn't, either thing. Still, what is evidence when you've
got a dream? Just like the dream of the white picket fence
and roses round the door, which people cling on to in
America, English couples spend their lives chasing money to
pay the banks for the houses they live in, all the while
hoping against hope for a fairy tale ending. Who could
possibly think of moving, when such entertainment is on
offer? Not even Russia can provide such daily amusements!

----------------------------------------------------
Mike Scantlebury is an Internet Author from England. He
might be disgruntled but that doesn't mean that the early
years of the 21st century is a good time to be gruntled. On
the contrary, this man talks sense. Tune into his missives
at one of his many websites, blogs, Youtube videos and
Facebook pages.
Try http://www.mikescantlebury.com

Real Estate Title Holding - Part One

Real Estate Title Holding - Part One
There are several ways to hold the title to a property.
Some are simple; some are complex. Each has its advantages
and disadvantages, so you have to decide which one is right
for you.

In the first part of this article, I'll describe the most
common forms of title holding and the advantages and
disadvantages of each. Sole Proprietorship This is most
common form of ownership.

All you need is a title of the property vested in your name
(or other designated person). A sole proprietorship has
several advantages: It's the easiest and cheapest form of
ownership. You have complete control and decision-making
power over the business.

The sale or transfer of property can take place at your
discretion. There are no corporate tax payments. There are
minimal legal costs to forming a sole proprietorship. There
are few formal business requirements.

As with any form of title holding, a sole proprietorship
also has its disadvantages: You can be held personally
liable for the debts and obligations of the business. This
means you have no protection against lawsuits or other
claims. All responsibilities and business decisions fall on
your shoulders. There are no significant tax advantages.
All your income and expenses are reported directly on your
personal tax return. In the event you die, there is no
favorable tax treatment or avoidance of probate.

Joint Tenancy

This is a form of ownership by two or more individuals
together. It's different from other types of co-ownership
in that the surviving joint tenant immediately becomes the
owner of the whole property upon the death of the other
joint tenant. This is called a "right of survivorship."

A joint tenancy between a husband and wife is known as a
tenancy by the entirety. This form has some characteristics
different than other joint tenancies, such as the inability
of one joint tenant to sever the ownership and differences
in tax treatment.

A joint tenancy requires a unity of time, title, interest
and possession. "Unity of time" means that all the joint
tenants must take title by the same deed at the same time.

Each tenant must own an equal interest or percentage of the
property. So, if you have two joint tenants, they each own
50%; three joint tenants 331/3%; and so forth.

If the percentage or interest is unequal, then it's not a
joint tenancy. By law, each joint tenant is entitled to the
right of possession and can't be excluded by the others.

A judgment lien or bankruptcy can terminate a joint
tenancy. A new joint tenant can be added by executing a new
deed.

Here are the advantages of a joint tenancy:

You get a stepped-up basis on your deceased joint tenant's
portion of the property. "Stepped up" means that the
taxable basis is increased for the portion of the property
owned by the deceased joint tenant to the current market
value at the time of death. This means that the surviving
joint tenants may be able to sell the property with much
lower taxes.

Married couples often hold title to investment properties
in a joint tenancy. If one spouse dies, this can result in
a step up in basis to the fair market value at the time of
death rather than just a step up for the portion owned by
the deceased joint tenant. Laws on this subject vary from
state to state and may include additional options.

There are also disadvantages to a joint tenancy: The
co-owners may disagree or quarrel. If they do disagree, an
expensive and time consuming law suit may be required for
the original owner to exercise his or her intentions for
the asset. If an asset is owned prior to marriage, the
original owner may lose part of the asset in a divorce. A
jointly owned asset will be subject to judgments against
every owner and may be lost in the bankruptcy of any owner.
The financial management advantages of trusts are
eliminated, especially where aged parents or minor children
are involved, as are the possible tax-savings features of
trusts and estates.

Assets may not be available to the executor of a deceased
joint owner's estate. In such a situation, it may then be
necessary to sell other assets, possibly at a loss, in
order to meet tax payments or other cash needs to settle
the affairs of the deceased. The one who originally owned
the property, and subsequently places it in a joint
tenancy, is no longer the sole owner.

If the original owner later desires to dispose of the
property, in many cases he or she can sell only his or her
part interest unless the other joint tenants agree and
cooperate. If both joint owners die in a common accident or
disaster and it cannot be determined who died first,
serious legal problems and an increase in the cost of
probate may result.

If a conservator is appointed for the original owner, the
probate court's authority may be required to use the asset
for that owner, increasing the cost of the conservatorship.
If minors or legally disabled adults are involved,
expensive conservatorship proceedings may be necessary.
Tenancy in Common

This is an arrangement in which several owners each own a
stated portion or share of the property. It has the
following advantages: Each owner can own a different
percentage, can take title at any time, and can sell his or
her interest at any time. If you're an owner, you also have
complete control over your part of the property and can
sell, bequeath or mortgage your interest as you decide
without any need for permission of the others. Upon your
death, your share becomes part of your estate, and you can
will it as you see fit.

Here are the disadvantages:

If another owner dies, you may find that he or she has left
their interest to someone you dislike or can't get along
with. Another owner can sell or borrow against his or her
property. This can create conflicts.

Financial difficulties of another owner or owners can badly
affect your interest in the property. If an owner had a
judgment leveled against him or her, it could lead to
foreclosure on their interest in the property. Or a
bankruptcy proceeding could order the forced sale of the
property to satisfy creditors, unless you and the other
owners are willing to pay off the creditors and buy out the
owner in question. Different owners may have different
plans for the property. This can lead to strife among the
tenants in common. Some may want borrow money using the
property as collateral; others may want to sell the
property, etc. If no one can agree, a business feud can
erupt into legal action and the resulting nastiness and
expense.

In the next part of this article, I will discuss more
choices.

Jack Sternberg

----------------------------------------------------
Jack Sternberg is a nationally recognized expert on real
estate investment who's been in the business for more than
30 years. Sternberg's deals have totaled over $750 million
and he's been to the closing table more than 1,500 times.
For more, visit http://www.askjacksternberg.com