Unless you Googled "Never Gonna Let You Down by Rick Astley" and by some miraculous phenomenon were led to this site, you are probably here  due to your interest in how to use real estate as an investment vehicle.  That means you've taken the first step, THINKING about what real  estate might do for you and your future goals, whatever they might be.  This is where most people stop.  For the majority of THINKERS,  investing in real estate gets tossed into the SOMEDAY pile of your brain at this point.  Also located in the SOMEDAY pile is the assumed fact  (whether true or false) that you WILL have a higher income in the future and THEN you can think about accomplishing other items in the same  pile (perhaps new car, boat, remodeled kitchen, etc. are also lying in the SOMEDAY pile).

The fact is, however, that with an increased salary usually comes increased personal expenditures; that boat and marble counter top kitchen  often get retrieved from the SOMEDAY pile first, many times based on speculation (via credit cards and loans) before the earnings even  increase.  So now you are back at square one; you now must make even more income SOMEDAY before you might ever think about real estate again.  So, how does one ever cross the bridge over the SOMEDAY River and never look back?

I was once told by a coworker, "Remember, in two days, tomorrow will be yesterday."  I prefer to stretch it out a bit and say, "Remember, in  two years, next year will be last year."  How many times have you thought, "Man, if I had started doing such and such two years ago, I would  have accomplished such and such by now! Why didn't I do that? Those years just flew by!"  The point is, it is always easy to find an excuse  about why NOW isn't the right time to invest.

Since there are an infinite number of concoctions as to why NOW isn't right, you will have plenty of excuses to carry you through your entire  life, always giving you reasons to not take ACTION.  The sad part is that when you look back in time, the things that you didn't do will  stand out but the excuses of that prior time will most likely seem like minor points.  In the end, you have to have enough willpower to take  ACTION in the NOW, knowing that the actions you take TODAY will make you proud in the FUTURE.  This is how you will make it across the bridge  of SOMEDAY River.  Let's talk about some hypothetical examples that most of us can relate with.

Say you are faced with the need for a different car.  There's that shiny new one you drive past everyday going to work. You stop by the  dealer and he approves you for that shiny brand new car for payments of only $500 a month.  Over the period of your five year car loan you  will pay $30,000 for that new vehicle.

On the other hand, you could buy that nice used car with low mileage from your neighbor for only $8,000. But you say, "Since it's used there  will be higher maintenance costs." OK, let's say you spend $2,000 on maintenance for the used car during five years in addition to routine  maintenance that you would also spend on the new car.  So, over a five year period you will have saved $20,000 JUST by getting a used car vs.  a new one.  That's a 10% down payment on a $200,000 property!

How about personal habits that might be changed? I won't direct this at smokers and cigarette spending, as that's been done plenty, but how  about using coffee drinkers as an example?  Do you find yourself buying coffee shop drinks every day?  Let's say you buy a $2.00 straight  black coffee every morning (double that price if you like the fad drinks).  That means you spend approximately $60.00 per month on coffee.   If you would make your coffee at home instead you might spend a total of $15.00 per month, and that's buying the same brand of coffee beans  that were being used in the $2.00 drinks in the store. That means there's $45.00 a month, or $540.00 a year, that you can save by making your  coffee at home with no sacrifice in the quality of coffee.

Now try to cut out the daily bag of chips or candy bar that goes against your healthy diet anyway, now there's another $500 or so per year  that can be saved.  Now eat out one less time per week, there's another bundle of money saved.  Before long you have money to invest in real  estate, simply by replacing or cutting out daily spending habits.

It doesn't matter how much money you are currently making.  As the examples above show, A LOT of money can be saved simply by making a few  small lifestyle changes.  YOU have the power of deciding how your SOMEDAY will be.  YOU have the power to take ACTION today that will lead  you across the SOMEDAY River!  Do you want to be proud in a few years time (or less, if you are diligent)  that you saved enough to buy an  investment property that is putting you on the road to financial freedom? Or would you rather be proud that you showed up to work every day  in a brand new car, drinking coffee in a fancy cup, your stomach full of restaurant cuisine instead of the home-cooked meal,  no more near  financial independence than you were a few years back?  I know which one I would rather choose!

For detailed accounts of how wealthy people handle their personal finances, you can read the book The Millionaire Next Door by Thomas J.  Stanley and William D. Danko.

Investors LOVE to say the almighty word: CASHFLOW!  One of the first questions on many investors’ minds when considering an investment: Does it cashflow?  It’s like the magic ruler as to whether or not a property is worth buying.  It is true that cashflow can be a great indicator as to how a property is capable of performing, but ONLY looking at cashflow can lead you into an investment that isn’t that great or keep you from investing in a property that could be great but you miss the other indications.  The importance that people put on cashflow is quite logical.

Why do we have jobs? Cashflow! How do we offset our monthly bills that we have to pay? Cashflow!  How can we have more expendable income every month to do what we like to do? MORE cashflow!  But cashflow isn’t always the best thing for your investments!  Don’t get me wrong, it’s almost never a BAD thing to have cashflow, but that doesn’t mean it’s the BEST thing to have cashflow.

Let’s discuss how one even obtains cashflow.  Plain and simple, your monthly income from an investment has to exceed the monthly expenses from that investment, that’s how you get cashflow. (Note: different people include or exclude certain expenses such as incidental maintenance costs for the purpose of calculating cashflow, but that’s really irrelevant for this article.)  The funny thing is that almost ANY property can cashflow.  I’ll give you an extreme fictional example to illustrate the point.  I have one million dollars sitting around that I want to invest. I think, “man, it sure would be nice to have some monthly cashflow from my investment!”  I go to a lower-class neighborhood and find a nice duplex being sold for $100,000.  I want to make an offer and am told that it’s a multiple offer situation.<.p>

I REALLY want the place and don’t want to be beat out by other bidders, so I offer $1,000,000 for the property.  Sure enough, the seller accepts!  I pay cash for the property and now own it free and clear! I only have to pay taxes, insurance, and some maintenance costs–let’s say they add up to $500 per month.  I rent out the units for a combined total of $1,000 per month.  As you can see, I can now go brag to all my investor pals that I cashflow $500 every month on this great investment property I just bought.  This is a ridiculous example, as most people can clearly see that this would NOT be the best use of $1,000,000 cash.  But remember, what do many investors ask as their first inquiry? “Does it cashflow?”  Even in this extreme example I could look at them straight in the eyes and respond with an honest “YES!”

The point you should get from that example is that asking if a property does/can/will cashflow is really irrelevant unless you put it in perspective with the situation as a whole, what your personal goals are, and what is truly the best bang for your investment buck.  Let’s say, as a more realistic scenario, that you have $100,000 to invest (the quantity doesn’t really matter, the principles are what matter). You decide to use the money to make 10% down payments on five $200,000 properties.  After doing so and renting out the properties, you break even on every single property, NO CASHFLOW!

Some months you even have to chip in a few hundred dollars to pay for some expenses.  Depending on your personal situation, this may have been an excellent decision for tax purposes alone; positive cashflow is taxed as income, break-even numbers are not!  If you had just purchased one $100,000 property free and clear instead of dividing it for multiple down payments, sure, you would have positive cashflow every month, but you’d pay taxes on it, too!  Now figure the appreciate benefits of owning these five properties.

Let’s figure you gain a modest 4% annual appreciation (well below the historic average).  After just ONE year of holding the properties and “just breaking even”, you will have gained $40,000 in equity alone by doing nothing but holding them for a year and earning a very modest appreciation.  If you had bought just one $100,000 property free and clear so you could have the monthly cashflow, you will not even come close to gaining that much!  Plus, the tax benefits and appreciation mentioned are just a few of the many factors that make controlling multiple properties with less of your own money a better investment.

And again, I am in no way saying the cashflow is a bad thing, after all, it’s income from the properties that allow us to have them to begin with.  But do yourself a favor and discuss with a professional familiar with investment properties whether or not monthly cashflow is truly the best thing to be seeking in your particular situation.  Depending on your age, preferences, and investment strategy, maybe cashflow is good, maybe it’s not!

The Negative Results Of Short-Sighted Investing: Buy High And Sell Low

The stock market is not my expertise, but there are at least some lessons that can be learned from Wall Street and then applied to real  estate investing.  Take for example the question of "When's the right time to buy and when's the right time to sell?" The answer is simple  and has been heard many times by the average person, investor or not: "Buy low, sell high."  The more difficult part of this equation is  recognizing when something is being sold under value and/or factors that will cause the value of the stock (or whatever other investment) to  increase.

If you are able to make this analysis correctly and consistently, you will make money.  It is my argument, and that of thousands of real  estate investors, that it is very difficult for the average person to make good evaluations of stocks consistently over time due to the  intricacies of the factors that determine their worth.

But, if people want to invest successfully in stocks, what can they do? Well, one can buy shares of historically successful companies like  Coca-Cola, Wal-Mart, and Gillette, just to name a few, that are very likely to have continued success (these are called Blue Chip Stocks and  have slower but steady gains or would you go back to the past and buy stocks at Wal-Mart's IPO (Initial Public Offering, when you can first  buy stocks in a company)?

If you say travel back in time to buy, you're wise (and you'd be a multi-millionaire)!  No one could have ever guaranteed during Wal-Mart's  beginnings that it would be so successful, but some speculated that it would be and are probably very happy to have done so; but can the  average person do that consistently?  Again, I say, it's not easy for the average individual to analyze such complex factors to speculate  successfully with the stock market; if it were, everyone would be rich!

So what do most people actually do?  I would say the average stock market investor ends up buying what other people claim to be the current  great investment.  The problem is this: if it's already being publicized as the "new hot thing", you're too late!  The big gains have already  been made by those who bought up the stock BEFORE it reached its current value that gains all the attention.  By the time you're buying, the  people who got in early are probably thinking about selling……to you!

OK, OK, ENOUGH about the stocks; how does all this relate to real estate?!!  People like to do what other people are already having success  at, that's what feels comfortable.  Just like the stocks, however, this causes you to be well behind the game.  You will end up with a "BUY  HIGH, SELL LOW" mindset, exactly the opposite of what you should be doing!  It's mentally difficult to do what other people are advertising  as bad investments and there is no better example of this than right now.  The focus of news programs, politicians, newspapers, and even the  average person, is how BAD the housing market is!

That's funny because just a few years ago real estate was the talk of the town for how GOOD it was as housing prices soared to record-high  (albeit unsustainable) levels.  Many fell into the trap of buying when the market had already reached its peak and are now attempting to sell  when the market is at its bottom.  Guess who all the negative publicity comes from!  As a successful investor in real estate, don't look at  the present, look at the future, and get on track for a "BUY LOW, SELL HIGH" strategy.

Additionally, it should be no surprise to anyone that there are ups and downs in the real estate market; it has always done this and it  always will!  Many successful investors don't even worry about the roller coaster ride because they invest for LONG-TERM GAINS, which will  glide right through the ups and downs. The great part is that compared to investing in stocks, it is MUCH easier for the average person to  become educated and skilled at real estate.  You have to work hard, you have to be persistent, and you have to build up a team of experts  around you.

But instead of analyzing a paper coupon whose value is influenced by thousands of factors, you are analyzing a closely-held tangible  investment (the property itself) that in the long-run is influenced by only a dozen or so factors.  So instead of listening to all the  current hype about how bad the housing market is, think for the future!  BUY LOW, SELL HIGH! NOW is a perfect time to start the process!

Town homes and other co-ops are a hybrid somewhere in between a condominium and a single family home. Usually a town home is attached to one or more other town homes, but has a little bit of outside space that is your own to take care of as you please. There are however also detached townhomes inside of the community of town homes, which act like a single family home except that lawn and snow, trash and recycling are usually taken care of via an Association fee.

There are typically no age restrictions, and fewer restrictions on pets and a condominium. And the association fee is often less monthly than a condo, but has less facilities available. In a town home, often the Association fee will also cover general exterior maintenance, such as exciting and roofing.

That being said, there are different types of town homes. Row homes, for example, are attached side by side to other MN town homes. Unless you are in one of the end units, you have a neighbor attached to each of your sidewalls. If these Row homes are also built back to back, all residents except for the end units will have neighbors on three sides.

In contrast, there are also townhomes built one on top of each other with single level living designed for the handicapped or elderly. But these are typically lowrise buildings (three stories or less) because each town home will have its own individual entrance. You can also find Minneapolis townhomes that are three or more stories tall. This design, often with a garage or carport on the main level, allows the maximum amount of square footage with the minimum amount of acreage used.

Styles to vary significantly, so whatever your lifestyle preferences dictate like your realtor know so that he or she may find the appropriate town home for you. Don't be afraid to say what you like and what you don't like. This will only help your agent to pick out units that you would like.

A MN condominium (aka a Minnesota condos) are the most basic sense is a building containing many individual residences inside. In this building residences are usually stacked on top of each other and side-by-side, so unless you are on the top of or bottom floor, you'll have neighbors living above and below you. And unless your condo is at the end of the building, you'll also have neighbors on either side. Usually, then, each individual owns their own unit, but has a shared ownership in the common grounds.

Condominium style living has existed for thousands of years in any place where the population is dense. It is an efficient way for communities of people to live together in a small area and maintain their privacy, while sharing the neighborhood.

A Minneapolis condominium also has the least amount of responsibility in care of all the types of living circumstances. You must obviously take care of the interior of your unit, but not typically anything outside of it. Hallways, parking lots, and shared facilities, like exercise rooms and swimming pools will all be taken care of by an Association. This association charges you a monthly fee and manages the maintenance of any shared facilities. The more facilities, the larger your monthly fee to take care of it all. But also, because you're sharing the community, the Association will have general rules that everyone must follow. For example, the most common is the limitation in number of pets and size they may be. Often a building will have age restrictions, for example 55 +, or even buildings that don't allow children.

If you are concerned that the bylaws of the community may be too strict for you, make sure to review the condo docs before you close on your purchase of a condominium. In most states, you will have a 10 to 15 day time window in which to review the documents. If you find anything that does not work for you, you cancel your offer on the condo. If, however, you decide that this is the community for you, when your 10 to 15 day window ends, you will continue as normal, to close on your new purchase.

The term "upside down" refers to a scenario where the owner of a home actually owes more on that home in the house would be worth if it were sold. It's not quite that simple because you have to also figure not only paying off the mortgage, but closing costs and
MN real estate commissions as well.

People do not get "upside down" on purpose, however. It's usually a matter of having purchased their
Minnesota home during a time when real estate was booming and now they happen to be in a time when it's declining. This cycle happens
frequently and is nothing to be afraid of. It just means that at that time of decline is not an ideal time to sell your home if you can help it…

Obviously, the best time to sell your home is during the boom-time. This cycle has gone back and forth since the beginning of property ownership, and if you don't want to lose money, do your best not to make a purchase when
Minnesota real estate boom is at its peak, and not to be forced to sell when real estate is declining.

The unfortunate part is no one can see when a "boom" is at its peak or a decline is at its bottom. Although news and other media love to be
"Doom Sayers" about it all, your best bet is to speak with an experienced

Minnesota Realtor about the local cycles and their average length of time.

More Money for Minnesota first time home buyers!

WOW! Who couldn't use a little extra cash when getting settled into their first MN home, right? Well, congress just passed a little-known incentive program to help encourage 1st time home buyers to buy something now!

If you are one of the thousands sitting on a fence right now, this info may bump you off the fence and into your new home. Could you use $7,500? Well, guess what? If you qualify, it's yours! And it's not tough to qualify!

The government is offering this $7,500 to any first time home buyer buying their new place between April 9, 2008 and July 1, 2009. To qualify you must be a US citizen (or qualified "nonresident alien") and make less than $75,000 a year. ($150,000 for married couples filing jointly). You also have to be a legitimate 1st time home buyer OR you can't have owned a home in the last 3 years… That's it! (well, and you have to be someone who files your taxes in order to receive the tax benefit!)

How does it work then, you may be asking yourself? EASY!

If you owe less than the $7,500 for taxes, the IRS cuts you a check for the difference. If you were owed a refund, add the $7,500 to your refund amount and that's what you'll receive. So, for example, let's say you owe $1,500 at tax time and your 1st time home buyer credit is $7,500. (7500-1500=6000) You will get a refund check in the amount of $6000.

If, for another example, you are owed a refund of $1,500 and your 1st time home buyer credit is $7,500 (7500+1500=9000), you will get a check in the mail for $9000. How cool is that?

There are no restrictions on the type of home: single family home, townhome, condo, new construction, or resale AND if you are a married couple filing separately, your credit will be split - $3,750 to each spouse. Almost sounds too good to be true!

When you are buying your home and you sit down with the lender you will realize there are lots of choices to make then you may not have expected. Typically a lender will ask you for your social security number and a bunch of financial questions. After this information is gathered, that lender can assess what types of loans you can qualify for...

Once he or she knows what loans you qualify for, the choice is now up to you. Different loans have different interest rates and different terms for example, the more money you put down, the better your interest rate typically. Also, if you are putting less than 20% down, the less you put down the more PMI (private mortgage insurance) you pay.

Your lender can show you side by side how each loan will perform over time. Based on that you can discuss what works for your budget. Also discuss with your lender such creative solutions is having the seller pay for some of the closing costs. That, of course affects the purchase price, but can be a great solution if you don't have a lot of money out of your own pocket to pay for those closing costs.

For recommendations of good Minnesota mortgage lenders that will take care of you well, and manage all the details necessary for you to close on the purchase of your new home quickly and efficiently, ask your Realtor or friends and family for some recommendations.

Very simply put, a buyers market is a

Minnesota real estate market in which the buyer has the best possible advantage. The conditions that create this market usually involve circumstances that generate more homes on the market than there are buyers that can buy them up.

What happens when this occurs is anyone who must sell their home is put in a tight spot. If, for example, someone had a death in the family, a health issue that must be dealt with, or their job was relocated and they were forced to leave and sell their home, they will have to sell it for the best price possible compared to all the other homes on the market. And, since there are so many competing homes, if they want to sell quickly, they must slash the price or risk having the house much longer than their finances would allow.

This is unfortunate for the sellers, but advantageous for buyers as they want to find the best deal possible in their new purchase. And it\'s times like these, when it\'s a
"Buyers Market", that investors and homebuyers alike have Hey-Day! It\'s like a giant clearance sale!

If you think of real estate like you think of stocks and bonds, ideally you would like to buy low and sell high. And, what a buyers market is in essence, are the stocks at their lowest possible price. It is unfortunate that these are the times that the news channels will tell you how bad real estate is, when in fact it\'s only bad if you\'re forced to sell something.

A single family home, often referred to as a detached home, is basically a freestanding residence for one family. It is not subdivided in any way, it is just one unit. Owning this type of structure usually means you also own some of the land surrounding it and are responsible for 100% of its care. However, as with any rule, there are exceptions.

When you purchase a single family home in Minnesota you are typically responsible for everything, whether you do it yourself or hire someone else. If there is a lawn, you must mow it; if the roof needs repair, you must manage that as well? you get the idea. But here, you also get to make your own rules, inside the letter of the local law.

Usually, in a modern Western single family home you will find a living room, dining room, kitchen, at least one bedroom, and at least one bathroom. You may also find such additional spaces as a den or office, storage room, family room, garage or carport, laundry room, study, game room, media room, bonus from or even the more exotic studio, wine cellar or library.

Of all the types of residential real estate, it is the MN single family home that has the most potential for the greatest amount of square footage and specific amenities. Because an owner owns the entire structure and the land on which it's built, he or she may customize it to their hearts content within the confines of the local law.