Real Estate Leads For Realtors

Because real estate prices have dropped quite a bit, the potential commissions that real estate agents and brokers could earn have also dropped. But the drop in commissions can be more than offset by the amount of properties that can be sold. And getting quality real estate leads is one of the keys to making this a reality for real estate professionals. This is because there are so many more properties on the market now than there were before the bubble burst.

The rise in the number of homeowners who are underwater on their mortgages has increased so much that a very large number of them have decided that they cannot afford to stay in their homes. They would rather sell their home and buy a comparable home for a much lower price, and take the loss so that they can improve their cash flow situation by having a lower mortgage payment each month. And since there is no shortage of properties to buy, these people had no problem finding a suitable home for a good price.

And another result of the rise in available properties is that more and more people are becoming first-time homeowners. Since prices on homes are falling, more and more people are able to afford a home for the same amount they are currently paying in rent. So the logical choice for these people is to buy a house rather than continuing to rent.

These factors all lead to one thing – a higher need for real estate agents to help the buying and selling of all of these properties. Therefore, even though prices have fallen, the quantity of available properties, buyers, and sellers has raised which more than makes up for the lower prices in terms of how much a given real estate agent could make in the current real estate market. And as we all know, the more clients a real estate agent has, the more properties they’ll sell and the more money they’ll make.

The problem comes in when a real estate agent has already gone through their current client list. The best way for them to get more clients is to somehow obtain more real estate leads. Not only do they need more leads, they need high quality leads if they are going to be successful in converting a high number of them into clients who actually follow through on buying and/or selling one or more properties.

So how can you get more real estate leads? There are of course many different ways. These include buying them from an agency that offers them, advertising, subscribing to lead generation websites, developing and keeping current your own real estate website that draws potential

clients to it, and best of all by getting them through your own network. There are undoubtedly other ways of generating real estate leads as well, but these are the most common methods – all of which have proven to work to a certain degree.

One of the easiest ways to get real estate leads is by purchasing them. There are companies whose sole purpose is to find people who want to buy or sell a property. They then sell this information to people who are willing to pay for it. So if you are a real estate agent looking for real estate leads and either don’t have the time to find your own, or simply don’t want to, then this may be a good option for you.

There are two different major ways to do this. You can purchase the real estate leads from a company as a set of data that you will get in the form of a list or spreadsheet. Then you will need to start sifting through them and using the data available to qualify and categorize them yourself. And after that, it’s time to start making calls to find out they are valid leads or not.

The other way of purchasing real estate leads is by subscribing to a real estate lead generator website that will send you much smaller lists of leads on a regular basis. This can be nice because the information is likely to be much more current than buying a single very large list of leads. But this also means that there are fewer to work with so it doesn’t give you as much freedom in terms of choosing who to contact first.

Purchasing real estate leads or subscribing to a lead generation website can also be expensive. This can be a very bad thing since the whole intent of buying leads is to find clients, sell properties, and make commissions, if the leads that you buy don’t turn into commissions. In that case, not only did you not sell any properties (or many properties), but you wasted money on worthless information, and you wasted time contacting worthless leads when you could have been working on finding good real estate leads instead.

Another way to generate real estate leads is by advertising. If you are a real estate agent, broker, or business person, advertising your services may be a good way to generate real estate leads. This type of lead generation is great because rather than you doing the work to find people who want to buy or sell a property, the tables are turned and they come looking for you instead.

In addition to having people try to find you instead of you trying to find them, there is another benefit to advertising to generate real estate leads. The people who are trying to find you are already definitely interested in buying or selling a property. This means that you don’t have to worry about whether they are going to turn out to be qualified leads or not, because they definitely will be.

A similar way to generate¬†by advertising which can be even more effective than simply advertising on a billboard or in the paper is by setting up your own real estate website. Websites are surprisingly inexpensive to have hosted, and having one developed for you doesn’t have to be expensive either. And if you learn the basics of website development, you’ll be able to maintain it by yourself after it’s been set up so that you can always keep it current.

The reasons to keep your website current cannot be understated. First, you have to keep it updated with the properties you are trying to sell so that the people who visit your website will have something to look at – and since this list of properties will be changing frequently as your client list grows and changes, you’ll need to change your website often to incorporate the new properties and eliminate the ones that are no longer available.

A second reason for keeping your website updated on a regular basis your page rank will grow higher. Search engines use a number of factors to determine how relevant they are to certain keywords, and where to display them in a list of search results. And one of the biggest things that moves a website toward the top of the list is it’s page rank, which is greatly affected by how active and how current the website is. So the more often you update your website, the higher its page rank will be, the higher it’ll show up in search results related to real estate keywords, and the more visitors you’ll get to your site.

Once you get visitors to your site, you’ll be getting the exposure you want to potential clients for free. They can stay on your site for as long as they want to and look at as few or as many properties as they want to. And you don’t have to do anything in order to help them. In fact there could be thousands of people all on your website at the same time. That is something that you would not likely ever have the opportunity to do in person. This phenomenon is what is known as leverage, and leverage is what can turn a small business into a fortune 500 business in short order when managed correctly.

The best way to do real estate lead generation also happens to be one of the most difficult – at least in the beginning. The method of finding leads is by building a very large network, and using it. This is one of the best ways to get leads because it is one of the most surprisingly effective ways. But unfortunately, it’s also one of the more difficult ways to start, and takes a while to yield significant results.

The first thing you’ll need to do is to start building your network. And it’s not that you just need to start building it, you need to intentionally focus on building your network each end every day, no matter where you are or who you’re talking to. This is because for most people, networking does not come naturally.

If you are like most people, you are probably somewhat shy and don’t make it a point to intentionally meet and talk to new people on a regular basis. But if you want to build a network, you’ll have to do exactly that. This is something that can come as a challenge to say the least, both emotionally and technically, but it is well worth the effort in the long run.

It can be emotionally difficult because a large part of building a large network is dealing with rejection. And if you want to build a large network quickly, you’ll have to deal with a lot of rejection each and every day. Too many people, being rejected is taken personally and it ends up wearing them down so that they eventually give up before they gain the benefits that building a large network provides. But if you can learn how to not take rejection personally, you’ll succeed where so many others have given up and failed as a result.

And networking to generate real estate leads can be done almost anywhere. When you need to put some gas in your car, park on the other side of the pump from someone who’s already there and try to strike up a conversation where you’ll be able to tell them that you’re in the real estate business and can help them or anyone else they know who may be looking to buy or sell. And if you’re really serious about it, you may want to only get $10 or some other small amount of gas at a time so that you’ll need to go to the gas station more often and have more opportunities to network.

You can also build your network by meeting new people at any other place. You could talk to someone at the grocery store, library, church, waiting in line at the bank, or anywhere you are around other people for more than a few minutes at a time and starting a conversation wouldn’t be too awkward. It can be done anywhere, with just about anyone, at almost any time. And the more dedicated you are to it, the faster you’ll be able to grow your network and the better off you’ll be in the long run.

Some of the best ways to network are by talking to the people you already know. These are people who are already in your network, and you can use them to help you grow your network even larger. The most obvious way is to simply ask them if they are interested in buying or selling a property in the near future, and to keep you in mind if they are.

But another way to help you grow your network is to ask them who they know that may be interested in buying or selling a property. You are basically asking them for real estate leads using different words. You could ask them for the names and numbers of people who they know who may be interested in buying or selling a property, or you could ask them to give your contact information to the people they have in mind when you ask them that question.

It’s a great idea to have business cards with your contact information made up when you’re networking. That way you won’t have to rely on people’s memories which are definitely not the most reliable things when compared to something they can simply read from a card. Cards on the other hand make it so that the person you are giving your contact information to doesn’t have to rely on their memory, and it puts forth a more professional image as well which can only benefit you.

Real estate values have taken a dive and one of the results has led to there being many, many more properties on the market now compared to before the economy took a dive in 2008. This means that even though the prices are lower, the higher quantity of properties on the market make it possible to buy and sell more of them and make more money in commissions as a result which will more than make up for the decreased individual property values.

I order to sell more properties you must have more clients. And to get more clients, you need to have more real estate leads. These real estate leads can be generated in a variety of different ways, all of which can be useful to real estate professionals. Having reliable leads will definitely result in more clients, more sales, and more money made in commissions. Purchasing them, advertising for them, or getting them from your network is all great ways go get leads that all have their own strengths and weaknesses. Pick the one that will work best for you, and you’ll be on your way to making more money through real estate in less time that you think.

Limited Liability Corportations and Foreign Investment in California Real Estate

There is some exciting news for foreign investors due to recent geo-political developments and the emergence of several financial factors. This coalescence of events, has at its core, the major drop in the price of US real estate, combined with the exodus of capital from Russia and China. Among foreign investors this has suddenly and significantly produced a demand for real estate in California.

Our research shows that China alone, spent $22 billion on U.S. housing in the last 12 months, much more than they spent the year before. Chinese in particular have a great advantage driven by their strong domestic economy, a stable exchange rate, increased access to credit and desire for diversification and secure investments.

We can cite several reasons for this rise in demand for US Real Estate by foreign Investors, but the primary attraction is the global recognition of the fact that the United States is currently enjoying an economy that is growing relative to other developed nations. Couple that growth and stability with the fact that the US has a transparent legal system which creates an easy avenue for non-U.S. citizens to invest, and what we have is a perfect alignment of both timing and financial law… creating prime opportunity! The US also imposes no currency controls, making it easy to divest, which makes the prospect of Investment in US Real Estate even more attractive.

Here, we provide a few facts that will be useful for those considering investment in Real Estate in the US and Califonia in particular. We will take the sometimes difficult language of these topics and attempt to make them easy to understand.

This article will touch briefly on some of the following topics: Taxation of foreign entities and international investors. U.S. trade or businessTaxation of U.S. entities and individuals. Effectively connected income. Non-effectively connected income. Branch Profits Tax. Tax on excess interest. U.S. withholding tax on payments made to the foreign investor. Foreign corporations. Partnerships. Real Estate Investment Trusts. Treaty protection from taxation. Branch Profits Tax Interest income. Business profits. Income from real property. Capitol gains and third-country use of treaties/limitation on benefits.

We will also briefly highlight dispositions of U.S. real estate investments, including U.S. real property interests, the definition of a U.S. real property holding corporation “USRPHC”, U.S. tax consequences of investing in United States Real Property Interests ” USRPIs” through foreign corporations, Foreign Investment Real Property Tax Act “FIRPTA” withholding and withholding exceptions.

Non-U.S. citizens choose to invest in US real estate for many different reasons and they will have a diverse range of aims and goals. Many will want to insure that all processes are handled quickly, expeditiously and correctly as well as privately and in some cases with complete anonymity. Secondly, the issue of privacy in regards to your investment is extremely important. With the rise of the internet, private information is becoming more and more public. Although you may be required to reveal information for tax purposes, you are not required, and should not, disclose property ownership for all the world to see. One purpose for privacy is legitimate asset protection from questionable creditor claims or lawsuits. Generally, the less individuals, businesses or government agencies know about your private affairs, the better.

Reducing taxes on your U.S. investments is also a major consideration. When investing in U.S. real estate, one must consider whether property is income-producing and whether or not that income is ‘passive income’ or income produced by trade or business. Another concern, especially for older investors, is whether the investor is a U.S. resident for estate tax purposes.

The purpose of an LLC, Corporation or Limited Partnership is to form a shield of protection between you personally for any liability arising from the activities of the entity. LLCs offer greater structuring flexibility and better creditor protection than limited partnerships, and are generally preferred over corporations for holding smaller real estate properties. LLC’s aren’t subject to the record-keeping formalities that corporations are.

If an investor uses a corporation or an LLC to hold real property, the entity will have to register with the California Secretary of State. In doing so, articles of incorporation or the statement of information become visible to the world, including the identity of the corporate officers and directors or the LLC manager.

An great example is the formation of a two-tier structure to help protect you by creating a California LLC to own the real estate, and a Delaware LLC to act as the manager of the California LLC. The benefits to using this two-tier structure are simple and effective but must one must be precise in implementation of this strategy.

In the state of Delaware, the name of the LLC manager is not required to be disclosed, subsequently, the only proprietary information that will appear on California form is the name of the Delaware LLC as the manager. Great care is exercised so that the Delaware LLC is not deemed to be doing business in California and this perfectly legal technical loophole is one of many great tools for acquiring Real Estate with minimal Tax and other liability.

Regarding using a trust to hold real property, the actual name of the trustee and the name of the trust must appear on the recorded deed. Accordingly, If using a trust, the investor might not want to be the trustee, and the trust need not include the investor’s name. To insure privacy, a generic name can be used for the entity.

In the case of any real estate investment that happens to be encumbered by debt, the borrower’s name will appear on the recorded deed of trust, even if title is taken in the name of a trust or an LLC. But when the investor personally guarantees the loan by acting AS the borrower through the trust entity, THEN the borrower’s name may be kept private! At this point the Trust entity becomes the borrower and the owner of the property. This insures that the investor’s name does not appear on any recorded documents.

Because formalities, like holding annual meetings of shareholders and maintaining annual minutes, are not required in the case of limited partnerships and LLCs, they are often preferred over corporations. Failing to observe corporate formalities can lead to failure of the liability shield between the individual investor and the corporation. This failure in legal terms is called “piercing the corporate veil”.

Limited partnerships and LLCs may create a more effective asset protection stronghold than corporations, because interests and assets may be more difficult to reach by creditors to the investor.

To illustrate this, let’s assume an individual in a corporation owns, say, an apartment complex and this corporation receives a judgment against it by a creditor. The creditor can now force the debtor to turn over the stock of the corporation which can result in a devastating loss of corporate assets.

However, when the debtor owns the apartment building through either a Limited Partnership or an LLC the creditor’s recourse is limited to a simple charging order, which places a lien on distributions from the LLC or limited partnership, but keeps the creditor from seizing partnership assets and keeps the creditor out the affairs of the LLC or Partnership.

Income Taxation of Real Estate

For the purposes of Federal Income tax a foreigner is referred to as nonresident alien (NRA). An NRA can be defined as a foreign corporation or a person who either;

A) Physically is present in the United States for less than 183 days in any given year. B) Physically is present less than 31 days in the current year. C) Physically is present for less than 183 total days for a three-year period (using a weighing formula) and does not hold a green card.

The applicable Income tax rules associated to NRAs can be quite complex, but as a general rule, the income that IS subject to withholding is a 30 percent flat tax on “fixed or determinable” – “annual or periodical” (FDAP) income (originating in the US), that is not effectively connected to a U.S. trade or business that is subject to withholding. Important point there, which we will address momentarily.

Tax rates imposed on NRAs may be reduced by any applicable treaties and the Gross income is what gets taxed with almost not offsetting deductions. So here, we need to address exactly what FDAP income includes. FDAP is considered to include; interest, dividends, royalties, and rents.

Simply put, NRAs are subject to a 30 percent tax when receiving interest income from U.S. sources. Included within the definitions of FDAP are some miscellaneous categories of income such as; annuity payments, certain insurance premiums, gambling winnings, and alimony.

Capital gains from U.S. sources, however, are generally not taxable unless: A)The NRA is present in the United States for more than 183 days. B) The gains can be effectively connected to a U.S. trade or business. C) The gains are from the sale of certain timber, coal, or domestic iron ore assets.

NRA’s can and will be taxed on capital gains (originating in the US) at the rate of 30 percent when these exceptions apply.Because NRA’s are taxed on income in the same manner as a US taxpayers when that income can effectively be connected to a US trade or business, then it becomes necessary to define what constitutes; “U.S. trade or business” and to what “effectively connected” means. This is where we can limit the taxable liability.

There are several ways in which the US defines “US trade or Business” but there is no set and specific code definition. The term “US Trade or Business” can be seen as: selling products in the United States (either directly or through an agent), soliciting orders for merchandise from the US and those goods out of the US, providing personal services in the United States, manufacturing, maintaining a retail store, and maintaining corporate offices in the United States.Conversely, there are highly specific and complex definitions for “effectively connected” involving the “force of attraction” and “asset-use” rules, as well as “business-activities” tests.

Generally and for simplistic explanation, an NRA is “effectively connected” if he or she is engaged as a General or limited partner in a U.S. trade or business. Similarly, if the estate or trust is so engaged in trade or business then any beneficiary of said trust or estate is also engaged

For real estate, the nature of the rental income becomes the critical concern. The Real Estate becomes passive if it is generated by a triple-net lease or from lease of unimproved land. When held in this manner and considered passive the rental income is taxed on a gross basis, at a flat rate of 30 percent with applicable withholding and no deductions.

Investors should consider electing to treat their passive real property income, as income from a U.S. trade or business, because the nature of this type of holding and loss of deduction inherent therein is often tax prohibited. However, the election can only be made if the property is generating income.

If the NRA owns or invests in or owns unimproved land that will be developed in the future, he or she should consider leasing the land. This is a great way to generate income. Investment in income-generating allows the NRA the ability to claim deductions from the property and generate a loss carry-forward that will offset income in future years.

There are many tools we can use to assist our NRA clients in avoiding taxation on Real Estate income property, one of which is ‘portfolio interest’, which is payable only on a debt instrument and not subject to taxation or withholding. There are several ways to fit within the confines of these ‘portfolio interest’ rules. NRAs can participate in the practice of lending through equity participation loans or loans with equity kickers. An equity kicker is like a loan that allows the lender to participate in equity appreciationAllowing the lender to convert debt into equity in the form of a conversion option is one way that this can be accomplished as these provisions usually increase interest rates on a contingent basis to mimic equity participation.

There are two levels of tax applicable to a foreign individual or a foreign corporation who owns a U.S. corporation.

The U.S. corporation will be subject subjected to a 30 percent withholding tax on its profits, when the income is not re-invested in the United States and there will be a tax on dividends paid to the foreign shareholders as well. When the U.S. business is owned by a foreign corporation, whether directly or through a disregarded entity, or through a pass-through entity. The branch profits tax replicates the double tax.

The U.S. has treaties covering the ‘branch profits tax’ with most of the European nations, reducing the tax to between 5 and 10 percent. The 30 percent tax is onerous, as it applies to a “dividend equivalent amount,” which is the corporation’s effectively connected earnings and profits for the year, less investments the corporation makes in its U.S. assets (money and adjusted bases of property connected with the conduct of a U.S. trade or business). The tax is imposed even if there is no distribution.

Foreign corporations are taxed on their effectively connected income and on any deemed dividends, which are any profits not reinvested in the United State under the branch profits tax.

The rules applicable to the tax on the disposition of real estate are found in a separate regime known as the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA).

Generally, FIRTPA taxes an NRAs holdings of U.S. real property interest (USRPI) as if he or she were engaged in a U.S. trade or business. As mentioned earlier, this means that the traditional income tax rules that apply to U.S. taxpayers will also apply to the NRA. Obligation to withhold 10 percent of the amount realized on any disposition falls on purchasers who acquire a USRPI from an NRA.

Ownership and interests of Real Estate Property include: fee ownership, co-ownership, leasehold, timeshare, a life estate, a remainder, a reversion or a right to participate in the appreciation of real property or in the profits from real property. For purposes of definition interest in real property would include any ownership of personal property used to exploit natural resources, land, buildings, mineral deposits, crops, fixtures, operations to construct improvements, the operation of a lodging facility, or providing a furnished office to a tenant (including movable walls or furnishings) as well as Improvements, leaseholds, or options to acquire any of the above.

There are several ways in which a partnership interest is treated as a USRPI: A domestic corporation will be treated as a U.S. real property holding corporation (USRPHC) if USRPIs are equal to or exceed 50 percent of the sum of the corporation’s assets. OR when 50 percent or more of the value of the gross partnership assets consists of USRPIs – Or when 50 percent or more of the value of partnership gross assets consist of USRPIs plus cash and cash equivalents. The disposition of partnership interest will be subject to FIRPTA. To the extent that such partnership continues to own USRPIs they will remain subject to this withholding.

The good news is that disposition of an interest in a USRPHC is subject to the FIRPTA tax and withholding but is not subject to state income tax. There is an obvious benefit when compared with the disposition of a USRPI owned directly. USRPI which are owned directly are subject to the lower federal capital gains rate as well as state income tax. If, however on the date of the disposition the corporation had no USRPIs and the totality of the gain was fully recognized (no installment sales or exchanges) on the sale of any USRPIs sold within the past five years Then this disposition cannot be subject to these rules.

Any USRPI sold by an NRA (individual or corporation) will be subject to 10 percent withholding of the amount realized. Withholding applies even if the property is sold at a loss.

The purchaser must report the withholding and pay over the tax, using Form 8288 within 20 days of the purchase. This is to be duly noted because if the purchaser fails to collect the withholding tax from the foreigner, the purchaser will be liable for not only the tax, but also any applicable penalties and interest. The withheld taxes are later credited against the total tax liability of the foreigner.

Instances wherein withholding is not required, are the following:

The seller provides a certificate of non-foreign status. Property acquired by the purchaser is not a USRPI. The transferred property is stock of a domestic corporation and the corporation provides a certificate that it is not a USRPHC.

The USRPI acquired will be used by the purchaser as a residence and the amount realized by the foreigner on the disposition is $300,000 or less. The disposition is not subject to tax, or the amount realized by the foreigner on the disposition is zero.

Estate and Gift Tax: In determining who is an NRA and who is excluded the test is completely different for estate tax purposes. The focus of inquiry will centers around the decedent’s residence. This test is very subjective and focuses primarily on intent.The test considers factors from across the board, such as how long the NRA has been in the United States, how often he or she travels as well as the size, and cost of home in the United States. The test will also look at the location of NRA’s family, their participation in community activities, participation in U.S. business and ownership of assets in the United States. Voting is also taken into consideration.

A foreigner can be a U.S. resident for income tax purposes but not be domiciled for estate tax purposes. An NRA, whether a nonresident alien or non-domiciliary, will be subject to a different transfer taxes (estate and gift taxes) than a U.S. taxpayer. Only the gross part of the NRA’s Estate that at the time of death is situated in the United States will be taxed with the estate tax. Although the rate of NRA’s estate tax will be the same as that imposed on U.S. citizens and resident aliens, the unified credit is only $13,000 (equivalent to about $60,000 of property value).

These may be ameliorated by any existing estate tax treaty. European countries, Australia, and Japan enjoys these treaties, The U.S. does not maintain as many estate tax treaties as income tax treaties.

The IRC defines the following property as situated in the United States: A) Shares of stock of a U.S. corporation. B) Revocable transfers or transfers within three years of death of U.S. property or transfers with a retained interest (described in IRC Sections 2035 to 2038). C) Debt issued by a U.S. person or a governmental entity within the United States (e.g., municipal bonds).

Real estate in the United States is considered U.S. property when it is physical personal property such as works of art, furniture, cars, and currency. Debt, however is ignored if it is recourse debt, but gross value is included, not just equity. U.S.-situs property is also a US property if it is a beneficial interest in a trust holding. Life insurance is NOT included as U.S.-situs property.

The estate tax returns must disclose all of the NRA’s worldwide assets, in order to determine the ratio that the U.S. assets bear to non-U.S. assets. The gross estate is reduced by various deductions relating to the U.S.-situs property. This ratio determines the percentage of allowable deductions that may be claimed against the gross estate.

As mentioned earlier, when real estate is subject to a recourse mortgage, the gross value of the real estate is included, offset by the mortgage debt. This distinction is very relevant for NRAs whose debts are subject to apportionment between U.S. and non-U.S. assets and therefore not fully deductible.

Accurate planning is crucial. Let us illustrate: An NRA can own US property through a foreign corporation and this property is not included in the NRA’s estate. This means that the US Real property owned by the NRA has now effectively been converted into a non-U.S. intangible asset.

And with Real Estate that was not initially acquired through a foreign corporation, you can still avoid future taxation to the estate by paying an income tax today on the transfer of the real estate to a foreign corporation (usually treated as a sale).

An NRA donor is not subject to U.S. gift taxes on any gifts of non-U.S. situs property gifted to any person, including U.S. citizens and residents. Gift taxes are imposed on the donor. Gifts from an NRA that are in excess of $100,000 must reported on Form 3520.46 by citizens and residents, however, Gifts of U.S.-situs assets are subject to gift taxes, with the exception of intangibles, which are not taxable.

If it is physically located in the United States tangible personal property and real property is sited within the United States. The lifetime unified credit is not available to NRA donors, but NRA donors are allowed the same annual gift tax exclusion as other taxpayers. NRA’s are also subject to the same rate-schedule for gift taxes.

The primary thrust of estate tax planning for NRAs is through the use of; the following: Foreign corporations to own U.S. assets, and the gift tax exemption for intangibles to remove assets from the United States. It is very important that the corporation have a business purpose and activity, lest it be deemed a sham designed to avoid U.S. estate taxes. If the NRA dies owning shares of stock in a foreign corporation, the shares are not included in the NRA’s estate, regardless of the situs of the corporation’s assets.

Let us break this down into one easy to read and understand paragraph:

In a nutshell, shares in U.S. corporations and interests in partnerships or LLCs are intangibles and the gift of an intangible, wherever situated, by an NRA is not subject to gift tax. Consequently, real estate owned by the NRA through a U.S. corporation, partnership, or LLC may be removed from the NRA’s U.S. estate by gifting entity interests to foreign relatives.

Ownership Structures: Here we discuss the ownership architectures under which NRA’s can acquire Real Estate. The NRA’s personal goals and priorities of course dictate the type of architecture that will be used. There are advantages and disadvantages to each of these alternatives. Direct investment for example, (real estate owned by the NRA) is simple and is subject to only one level of tax on the disposition. The sale is taxed at a 15 percent rate If the real estate is held for one year. There are many disadvantages to the direct investment approach, a few of which are: no privacy, no liability protection, the obligation to file U.S. income tax returns, and if the NRA dies while owning the property, his or her estate is subject to U.S. estate taxes.

When an NRA acquires the real estate through an LLC or an LP, this is considered an LLC or a limited partnership structure. This structure provides the NRA with protection of privacy and liability and allows for lifetime transfers that escape the gift tax. The obligation to file U.S. income tax returns and the possibility for U.S. estate tax on death remain, however.

Ownership of real estate through a domestic corporation, will afford privacy and liability protection, obviate the foreigner’s need to file individual U.S. income tax returns and allow lifetime gift tax-free transfers. *this refers to a C corporation, since a foreign shareholder precludes an S corporation.

Ownership of stock will not trigger a return filing obligation, unlike engaging in a U.S. trade or business which requires a U.S. tax return

Ownership of real estate through a domestic corporation has three disadvantages: Federal and state corporate income tax at the corporate level will add a second layer of tax. Dividends from the domestic corporation to its foreign shareholder will be subject to 30 percent withholding. Shares of the domestic corporation will be included in the U.S. estate of the foreign shareholder.

Furthermore, the foreign shareholder will be subject to FIRPTA, because the corporation will be treated as a USRPHC (upon the disposition of the stock in the corporation). The purchaser of the shares is then required the file a U.S. income tax return with 10 percent tax withholding. Actual ownership of the real estate may be held by the U.S. corporation directly, or by a disregarded entity owned by the corporation or through a U.S. partnership. An LLC that chooses to be taxed as a corporation can also be the corporation.

There are several advantages to foreign corporation ownership:

Liability protection– There is no U.S. income tax or filing requirement for the foreign shareholder. Shares in the foreign corporation are non-U.S. assets not included in the U.S. estate.

Dividends are not subject to U.S. withholding. There is no tax or filing requirement on the disposition of the stock. There is no gift tax on the transfer of those shares of stock.

Disadvantages of using the foreign corporation: A) just like with the domestic corporation, there will be corporate level taxes, because the foreign corporation will be deemed engaged in a U.S. trade or business. B) Possibly the largest disadvantage of ownership of U.S. real estate through a foreign corporation would be that the foreign corporation will be subject to the branch profits tax.

One of the most advantageous structure for ownership of U.S. real estate by NRAs is a hybrid foreign and U.S. corporation. It runs like this: The NRA owns a foreign corporation that in turn owns a U.S. LLC taxed as a corporation. The benefits to this type of structure is paramount to a good tax shield and offers: privacy and liability protection, escaping U.S. individual income tax filing requirements and it also avoids U.S. estate taxes. On top of that it allows for gift tax-free lifetime transfers, and avoids the branch profits tax.

The beauty and benefit of this is that the timing and the amount of this dividend is within the NRA’s control even though distributions from the U.S. subsidiary to the foreign parent are subject to the 30 percent FDAP withholding.

There are many things to consider and several structures available to limit tax liability, preserve and protect anonymity and increase profits of US Real Estate investments by foreign investors. We must keep in mind that each investment presents its own challenges and no structure is perfect. Advantages and disadvantages abound which will require a tailored analysis in light of the individual or group objectives.

It’s really about implementing a structure which will successfully carry the NRA through to his or her END GAME, with the utmost protection from liability and the maximum return on investment.

Jeffrey A Cancilla practices law in the area’s of: Immigration, Mortgage, Real Estate, Real Estate Settlement and Procedures,Truth in Lending Laws and more. To find out how you can get more out of your investment in US Real Estate or for any other legal matter mentioned here

Real Estate Agents and the Internet – How to Buy and Sell Real Estate Today

Then and Now

Ten years ago, a search for real estate would have started in the office of a local real estate agent or by just driving around town. At the agent’s office, you would spend an afternoon flipping through pages of active property listings from the local Multiple Listing Service (MLS). After choosing properties of interest, you would spend many weeks touring each property until you found the right one. Finding market data to enable you to assess the asking price would take more time and a lot more driving, and you still might not be able to find all of the information you needed to get really comfortable with a fair market value.

Today, most property searches start on the Internet. A quick keyword search on Google by location will likely get you thousands of results. If you spot a property of interest on a real estate web site, you can typically view photos online and maybe even take a virtual tour. You can then check other Web sites, such as the local county assessor, to get an idea of the property’s value, see what the current owner paid for the property, check the real estate taxes, get census data, school information, and even check out what shops are within walking distance-all without leaving your house!

While the resources on the Internet are convenient and helpful, using them properly can be a challenge because of the volume of information and the difficulty in verifying its accuracy. At the time of writing, a search of “Denver real estate” returned 2,670,000 Web sites. Even a neighborhood specific search for real estate can easily return thousands of Web sites. With so many resources online how does an investor effectively use them without getting bogged down or winding up with incomplete or bad information? Believe it or not, understanding how the business of real estate works offline makes it easier to understand online real estate information and strategies.

The Business of Real Estate

Real estate is typically bought and sold either through a licensed real estate agent or directly by the owner. The vast majority is bought and sold through real estate brokers. (We use “agent” and “broker” to refer to the same professional.) This is due to their real estate knowledge and experience and, at least historically, their exclusive access to a database of active properties for sale. Access to this database of property listings provided the most efficient way to search for properties.

The MLS (and CIE)

The database of residential, land, and smaller income producing properties (including some commercial properties) is commonly referred to as a multiple listing service (MLS). In most cases, only properties listed by member real estate agents can be added to an MLS. The primary purpose of an MLS is to enable the member real estate agents to make offers of compensation to other member agents if they find a buyer for a property.

This purposes did not include enabling the direct publishing of the MLS information to the public; times change. Today, most MLS information is directly accessible to the public over the Internet in many different forms.

Commercial property listings are also displayed online but aggregated commercial property information is more elusive. Larger MLSs often operate a commercial information exchange (CIE). A CIE is similar to an MLS but the agents adding the listings to the database are not required to offer any specific type of compensation to the other members. Compensation is negotiated outside the CIE.

In most cases, for-sale-by-owner properties cannot be directly added to an MLS and CIE, which are typically maintained by REALTOR associations. The lack of a managed centralized database can make these properties more difficult to locate. Traditionally, these properties are found by driving around or looking for ads in the local newspaper’s real estate listings. A more efficient way to locate for-sale-by-owner properties is to search for a for-sale-by-owner Web site in the geographic area.

What is a REALTOR? Sometimes the terms real estate agent and REALTOR are used interchangeably; however, they are not the same. A REALTOR is a licensed real estate agent who is also a member of the NATIONAL ASSOCIATION OF REALTORS. REALTORS are required to comply with a strict code of ethics and conduct.

MLS and CIE property listing information was historically only available in hard copy, and as we mentioned, only directly available to real estate agents members of an MLS or CIE. About ten years ago, this valuable property information started to trickle out to the Internet. This trickle is now a flood!

One reason is that most of the 1 million or so REALTORS have Web sites, and most of those Web sites have varying amounts of the local MLS or CIE property information displayed on them. Another reason is that there are many non-real estate agent Web sites that also offer real estate information, including, for-sale-by-owner sites, foreclosure sites, regional and international listing sites, County assessor sites, and valuation and market information sites. The flood of real estate information to the Internet definitely makes the information more accessible but also more confusing and subject to misunderstanding and misuse.

Real Estate Agents

espite the flood of real estate information on the Internet, most properties are still sold directly through real estate agents listing properties in the local MLS or CIE. However, those property listings do not stay local anymore. By its nature, the Internet is a global marketplace and local MLS and CIE listings are normally disseminated for display on many different Web sites. For example, many go to the NATIONAL ASSOCIATION OF REALTORS Web site, and to the local real estate agent’s Web site. In addition, the listing may be displayed on the Web site of a local newspaper. In essence, the Internet is just another form of marketing offered by today’s real estate agent, but it has a much broader reach than the old print advertising.

In addition to Internet marketing, listing agents may also help the seller establish a price, hold open houses, keep the seller informed of interested buyers and offers, negotiate the contract and help with closing. When an agent provides all of these services it is referred to as being a full service listing arrangement. While full service listing arrangements are the most common type of listing arrangement, they are not the only option anymore.

Changes in the technology behind the real estate business have caused many agents to change the way they do business. In large part, this is due to the instant access most consumers now have to property listings and other real estate information. In addition, the Internet and other technologies have automated much of the marketing and initial searching process for real estate. For example, consumers can view properties online and make inquires via email. Brokers can use automated programs to send listings to consumers that match their property criteria. So, some agents now limit the services they offer and change their fees accordingly. An agent may offer to advertise the property in the MLS but only provide limited additional services. In the future, some real estate agents may offer services in more of an ala carte fashion.

Because of the volume of real estate information on the Internet, when people hire a real estate agent today they should look at the particular services offered by the agent and the depth of their experience and knowledge in the relevant property sector. It is no longer just about access to property listing information. Buyers and sellers historically found agents by referrals from friends and family. The Internet now provides ways to directly find qualified agents or to research the biography of an agent referred to you offline. One such site, AgentWorld.com, is quickly becoming the LinkedIn or Facebook for real estate agents. On this site an agent can personalize their profile, start a blog, post photos and videos and even create a link to their web site for free. Once unique content is added to their profile page the search engines notice!

Some have argued that the Internet makes REALTORS and the MLS less relevant. We believe this will be false in the long run. It may change the role of the agent but will make knowledgeable, qualified, and professional REALTORS more relevant than ever. In fact, the number of real estate agents has risen significantly in recent years. No wonder, the Internet has made local real estate a global business. Besides, Internet or not, the simple fact remains that the purchase of real property is the largest single purchase most people make in their life (or, for many investors, the largest multiple purchases over a lifetime) and they want expert help. As for the MLS, it remains the most reliable source of real estate listing and sold information available and continues to enable efficient marketing of properties. So, what is the function of all the online real estate information?

Online real estate information is a great research tool for buyers and sellers and a marketing tool for sellers. When used properly, buyers can save time by quickly researching properties and, ultimately, make better investment decisions. Sellers can efficiently research the market and make informed decisions about hiring an agent and marketing their properties online. The next step is to know where to look online for some of the best resources.
Internet Strategies

In the sections that follow, we provide strategies and tips on how to use the Internet to locate properties for sale and research information relevant to your decision to purchase the property. There are many real estate Web sites from which to choose and although we do not mean to endorse any particular Web site, we have found the ones listed here to be good resources in most cases or to be so popular that they need mention. One way to test a Web site’s accuracy is to search for information about a property you already own.

Finding Real Estate for Sale

Despite the widely available access to real estate listings, many believe that MLS databases continue to offer the most complete and accurate source of real estate information. Most MLSs now distribute content to other Web sites (primarily operated by real estate agents). An excellent starting point for MLS originated content is the national NAR Web site, realtor.com, which is also the most popular web site for searching real estate listings. Virtually all local and regional MLSs have an agreement with realtor.com to display much of their active listing inventory.

Some local and regional MLS systems also have a publicly accessible Web site. However, to get complete information you will most likely still need to find a qualified local REALTOR. Many local real estate agents will also provide their customers (via email) new listings that are input into the MLS that match their predefined criteria. This can be very helpful to a busy buyer.

There are also many Web sites that display both real estate agent listed and for-sale-by-owner properties. Some of the more popular Web sites include zillow.com and trulia.com. These sites offer other services too. For example, zillow.com is best known for its instantaneous property valuation function and trulia.com for providing historical information. Another source of properties for sale is the state, regional, and local Web sites associated with brokerage companies; for example, remax.com or prudential.com. Search engines like yahoo.com and classified advertising sites like craigslist.com also have a large number of active real estate listings.

One key difference between these sites is how much information you can access anonymously. For example, at trulia.com you can shop anonymously up to a point but then you will need to click through to the agent’s Web site for more information. Many new real estate search engines allow you to sift through listings without having to fill out a form. The best strategy is to browse a few of the sites listed above to find geographic areas or price ranges that are interesting. Once you get serious about a property, then that is the time to find a qualified REALTOR of your choice to conduct a complete search in the local MLS.

It also never hurts to search the old-fashioned way by driving through the neighborhoods that interest you. There is no substitute for physically, not virtually, walking the block when you are making a serious investment decision. In this sense, real estate is still a very local business and standing in front of the property can lead to a much different decision than viewing a Web page printout.

Valuing Real Estate

As we mentioned, one of the most popular real estate tools is zillow.com’s instant property valuation. Just type in an address and in and you get a property value. It even charts the price ups and downs, and shows the last date sold (including price) and the property taxes. There are other sites that provide similar tools such as housevalues.com and homegain.com. Unfortunately, many people use these estimated values alone to justify sales prices, offers and counteroffers. However, these are only rough estimates based on a formula that incorporates the local county sales information. These estimates can swing wildly over a short period of time and do not appear to always track actual market changes, which are normally more gradual. In addition, these estimates do not automatically take into account property remodels or renovations or other property specific or local changes. This is not to say these sites are not useful. In fact, they are great starting points and can provide a good ball-park value in many cases.

When it comes to getting a more accurate value for a particular property, there are other strategies that are more trustworthy. One is to go directly to your county’s Web site. More often than not the county assessor’s area of the Web site provides sales and tax information for all properties in the county. If you want to research a particular property or compare sales prices of comparable properties, the local assessor’s sites are really helpful. When you visit a county’s Web site you are getting information straight from the source. Most counties today publish property information on their Web sites. Many times you cannot only see the price a previous owner paid, but the assessed value, property taxes, and maps. Some county assessors are now adding a market and property valuation tools too.

Given the importance of valuation to investing, we are also going to remind you of the two most important (non-Internet) valuation methods: real estate agents and appraisers. Working with a local REALTOR is an accurate and efficient way to get value information for a property. While one of the primary purposes of the MLS is to market the active property listings of its members, the system also collects sales information for those listings. REALTOR members can pull this sales information and produce comparable market analyses (sometimes called CMAs) that provide an excellent snapshot of a particular property’s value for the market in a particular area.

Finally, the most accurate way to value a property is by having a certified appraiser produce an appraisal. An appraiser will typically review both the sold information in the MLS system as well as county information and then analyze the information to produce a valuation for the property based on one or more approved methods of valuation. These methods of valuation can include a comparison of similar properties adjusted for differences between the properties, determine the cost to replace the property, or, with an income producing property, determine a value based on the income generated from the property.

The Neighborhood

There are many ways the Internet can help you get the scoop on a particular neighborhood. For example, census data can be found at census.gov. You can also check out the neighborhood scoop at sites like outside.in or review local blogs. A blog is a Web site where people discuss topics by posting and responding to messages. Start by looking at placeblogger.com and kcnn.org/citymediasites.com for a directory of blogs. Trulia.com has a “Heat Map” that shows how hot or cold each neighborhood is based on prices, sales, or popularity among the sites users.

Schools

When it comes to selling residential property or rental properties that cater to families, the quality of the area school district makes a huge difference. There are many Web sites devoted to school information. Check out greatschools.net or schoolmatters.com. Most local school districts also have their own Web site. These sites contain a variety of information about the public schools and the school district, including its district demographics, test scores, and parent reviews.

Finding the Right Real Estate Agent

A recent addition to the Internet boom in real estate information is Web sites that let real estate agents market their expertise and local knowledge by displaying their professional profiles and socially networking with blogs. You can search to find an agent with a particular expertise, geographic area of specialization, or an agent offering specific services. The web site AgentWorld.com lets users quickly and easily find an agent with the right expertise using keyword searches and clean and simple agent profiles. AgentWorld.com also enables agents to post personalized blogs, photos and videos to help consumers find the best agent for their needs. Plus, many agent profiles include a direct link to the agent’s web site where you will likely find the local MLS listings.

Maps and Other Tools

The Internet has made mapping and locating properties much easier. To get an aerial view or satellite image of a property or neighborhood, go to maps.live.com or maps.google.com or visit walkscore.com to see how walk-able a particular property is. These sites can give you an idea of the neighborhood characteristics and the types of entertainment, restaurants, and other facilities that are within walking distance of the property. Maps.Live.com provides a view at an angle so you can see the sides of houses and Maps.Google even gives you a 360 degree street-level view for certain neighborhoods. If you have not tried one of these satellite map Web sites, you really should if only for amusement.

Final Thoughts on Internet Strategies

The Internet is a very effective research and marketing tool for real estate investors but is not a replacement for a knowledgeable experienced real estate professional. The Internet can save you time and money by enabling quick and easy property research and marketing options. Sites like AgentWorld.com also help you efficiently find a REALTOR who fits your buying or selling needs.

Always remember, when it comes to Internet strategies for real estate: More knowledge is better. You need to use the Internet to build your knowledge base on a target property or to find a real estate agent with expertise you need. However, the big caution here is that the Internet should not replace human judgment and perspective, expert advice or physical due diligence-keys to successful investing.

Tyler D. Kraemer is an attorney and nationally published author. His books include The Real Estate Investor’s Tax Strategy Guide (2009 Adams Media) and The Complete Guide to Reverse Mortgages (2007 Adams Media). Tyler has been interviewed by publications across the U.S. on real estate, business and Internet related topics. He is also a contributing editor to the web site