If you really want to maximize the leverage of your purchasing power, it is time to go visit new developments. Simply put, builders are having an incredibly difficult time these days. In the mad rush to build, build, build, the market has become saturated. In fact, recent surveys have revealed builders are expecting the next year to be a bad one when it comes to sales. You can see evidence of this if you know anyone that works for a developer. If they have not already lost their job, they definitely know of others who have. As a buyer, the pain of the builder is your gain.

Simply put, they really need to move properties so they can handle their financing. This means you have all the leverage. You can ask for free upgrades, modifications and so on. Depending on how slow things are in the particular development, you can expect to get the builder to agree to some or all of your requests. The real estate market has changed dramatically. As a buyer, you are no longer at a disadvantage. Builders need to move properties, so use your new found leverage to get the most you can for your money.

While you can make large amounts of cash as a real estate investor, it does take an investment of time to learn the business and your market and having some cash to spend on marketing or holding cause sure helps. While there are methods for generating large amounts of cash quickly in real estate (like wholesaling and flipping), I generally recommend people get rich slowly with real estate investing by becoming a long-term buy rants and hold investor. In fact, you can become very, very rich in real estate working part-time. By investing a little time, each weekend looking at potential long-term rental properties, making smart offers on them and building a portfolio for passive income.

"But I can't stand my job! How long before I can quit?" Well that depends on how aggressively you start building your portfolio and just how much income you need to generate from your real estate investments. If you combine building a long-term real estate investment portfolio with the occasional "buy, fix and flip" house, you can probably quit your job relatively quickly. While I have done my share of "buy, fix and flips", at this stage in my investment career, I tend to buy and hold. Unless you're familiar with irregular income like a sales job, the stress is of relying on "buy, fix and flip" income is often too much for most people to bear

Assume you buy an investment property for $50,000 to $60,000, and you sell it on a lease-option contract for $80,000. You receive $4,000 as a down payment from the buyer, and you will get the remainder of the balance in 12 months. You’ve created a note for the remaining $76,000 that pays you $570 monthly (interest-only payments of 9%). This gives you nearly $7,000 more in interest payments, if you keep this property for a year. You then find a rehab property in an inexpensive neighborhood that you can get for $35,000. You offer a 10% down payment of $3,500, promising to pay of the loan in 13 months or less.

Now, you can use the $4,000 from the first property, so you don't have to come up with your own money for the down payment on your second property. Offer to pay 8% on the remaining $31,500. This is a monthly payment of $231. Be sure your agreement allows you to defer your first payment for 30-60 days. Now, if you can’t sell the house in 13 months (this certainly won't be a problem, though), you’ll have the cash from the first house you bought, when the $76,000 balloon payment comes due in 12 months, so you won’t lose anything or have to get your own financing, when you have to pay off your second home in 13 months. .

Homestead Exemptions
Author: Alex Emory

Many homeowners have never heard the term "Homestead Exemption." There are three possible reasons for this. First, you live in a state that does not require an Exemption Declaration, such as Texas, meaning that your Homestead Exemption is automatic. Second, you might live in one of the small number of states that do not offer their residents the protection of a Homestead Exemption. Third, your real estate agent never told you to file one after you bought your home.

So what´s the big deal?

In its broadest sense, a Homestead Exemption allows a homeowner to retain all or part of their home´s value or acreage in the following circumstances: Preventing the forced sale of a home to meet the demands of creditors; Providing a surviving spouse with shelter; Providing an exemption from property taxes.

The Homestead Exemption will NOT protect your home from a forced sale to cover mortgage debt or a mechanic´s lien.

The terms of the Homestead Exemption, of course, vary widely from state to state. Florida and Texas are considered to have the most liberal Homestead Exemptions. Florida protects an unlimited value of a home, but limits that protection to a half-acre within a municipality. Rural properties in Florida are allowed much greater acreage. Texas also places no cap on value, and allows for a generous 10 acres within a municipality, 100 acres in a rural area, and 200 hundred acres for a family in a rural area.

Most states don´t allow for such a broad application of Homestead Exemption. In those cases, if your home goes into a forced sale, a certain number of dollars or percentage of value will have to go to the homeowner, even if that reduces the amount of debt than can be paid back through the home sale. You are generally only allowed to have an exemption on one property, and it must be your primary residence.

Some states, counties, and even cities give their elderly, low-income, and disabled homeowners a property tax break via the Homestead Exemption. This can cap the dollar amount of property taxes, or allow for a certain dollar value (i.e. up to $75,000) to be non-taxable. This is especially helpful for those on a fixed income who may be living in an area undergoing tremendous growth or increase in property values.

Now for the necessary disclaimers: I am not a lawyer and do not work in real estate. This is the extent of what I know on this topic, from personal knowledge and culled from reference materials. Like all things in life, if you need a professional (such as a lawyer), by all means hire one and do not rely on this discussion forum for legal advice!!! I sincerely hope that readers will comment, expand, and expound on this topic. More information on Homestead Exemptions can be found in the excellent Nolo Law series.