Section 32 Working With Real Estate
Investors questions & answers.
Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) ANS -The disposition of a U.S. real
property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real
Property Tax Act of 1980 (FIRPTA) income tax withholding.
Ex. Because the seller was from Canada, FIRPTA applied, and the buyer of the property was required to
withhold a percentage of the sales price to ensure payment of taxes owed.
Investors can be categorized in two ways, by: ANS -Property type
Investment strategy
Property types include: ANS -Single-family homes
Multi-family residences
Apartments
Retail
Warehouse/storage
Other commercial
Vacant land
Investment strategies are the ways in which the investor profits on the investment. These include: ANS -
Fix and flip
Buy and hold (i.e., hold and rent)
Wholesaling
Fix and Flip ANS -This term is coined for properties that need a lot of rehab to make them appealing to
buyers. Real estate investors will buy the property, renovate it, and resell the property for a profit.
, buy and hold ANS -an investment strategy that involves simply buying stock and holding it for a period
of years
wholesalers ANS -Wholesalers arrange deals. They don't own properties, but rather make deals and
resell those deals to other investors for a fee. Their purchase and sale agreements typically include an
"or assigns" phrase, giving them the right to assign the property to another upon closing. Because
they're essentially middlemen, they need to find seriously discounted deals from very motivated sellers.
Wholesalers tend not to work with real estate professionals, but you'll know when you've met one. They
will ask you to search for "very motivated sellers" on the MLS, but otherwise will have few items on their
wish list in terms of type of property, location, etc., and they'll want you to send them the listings. A
problem can arise with wholesalers who don't in fact have an investor to whom to resell the property.
They may tie up the property, using the inspection period to try to find an investor to whom to
wholesale the property, and will terminate if they're unable to do so in time. This is unethical, not to
mention a big waste of your time. Know what you're getting into if you decide to work with a
wholesaler, and make certain your wholesaler client has a ready investor pool for the resale.
Certified International Property Specialist (CIPS) ANS -This designation is offered through the National
Association of REALTORS®. Members learn about currency and exchange rate issues, visa and tax laws,
cross-cultural relationships, regional market conditions, and investment performance. Those who earn
the certification are allowed to use the CIPS logo and brand, and are listed in the CIPS directory.
Certified Commercial Investment Member (CCIM) ANS -This designation is designed for brokers, leasing
professionals, investment counselors, asset managers, appraisers, property managers, developers,
institutional investors, commercial lenders, attorneys, and bankers, among others. CCIM curriculum
covers ethics, interest-based negotiation, financial analysis, market analysis, user decision analysis, and
investment analysis for commercial investment real estate.
Certified Property Manager (CPM) ANS -Geared to real estate property management specialists,
designees handle all forms of management from residential to commercial to industrial.
Institute of Real Estate Management (IREM) ANS -This organization offers the CPM certificate. The
designation is recognized by the National Association of REALTORS® and considered to be among the
industry's premier real estate management credentials. More than 8,600 professional real estate
managers hold this designation worldwide. CPM members manage approximately $900 billion in real
estate assets.
Associations ANS -Association membership is another way to obtain advanced training. Many national,
state, and local organizations provide opportunities for training, developing industry standards,
Investors questions & answers.
Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) ANS -The disposition of a U.S. real
property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real
Property Tax Act of 1980 (FIRPTA) income tax withholding.
Ex. Because the seller was from Canada, FIRPTA applied, and the buyer of the property was required to
withhold a percentage of the sales price to ensure payment of taxes owed.
Investors can be categorized in two ways, by: ANS -Property type
Investment strategy
Property types include: ANS -Single-family homes
Multi-family residences
Apartments
Retail
Warehouse/storage
Other commercial
Vacant land
Investment strategies are the ways in which the investor profits on the investment. These include: ANS -
Fix and flip
Buy and hold (i.e., hold and rent)
Wholesaling
Fix and Flip ANS -This term is coined for properties that need a lot of rehab to make them appealing to
buyers. Real estate investors will buy the property, renovate it, and resell the property for a profit.
, buy and hold ANS -an investment strategy that involves simply buying stock and holding it for a period
of years
wholesalers ANS -Wholesalers arrange deals. They don't own properties, but rather make deals and
resell those deals to other investors for a fee. Their purchase and sale agreements typically include an
"or assigns" phrase, giving them the right to assign the property to another upon closing. Because
they're essentially middlemen, they need to find seriously discounted deals from very motivated sellers.
Wholesalers tend not to work with real estate professionals, but you'll know when you've met one. They
will ask you to search for "very motivated sellers" on the MLS, but otherwise will have few items on their
wish list in terms of type of property, location, etc., and they'll want you to send them the listings. A
problem can arise with wholesalers who don't in fact have an investor to whom to resell the property.
They may tie up the property, using the inspection period to try to find an investor to whom to
wholesale the property, and will terminate if they're unable to do so in time. This is unethical, not to
mention a big waste of your time. Know what you're getting into if you decide to work with a
wholesaler, and make certain your wholesaler client has a ready investor pool for the resale.
Certified International Property Specialist (CIPS) ANS -This designation is offered through the National
Association of REALTORS®. Members learn about currency and exchange rate issues, visa and tax laws,
cross-cultural relationships, regional market conditions, and investment performance. Those who earn
the certification are allowed to use the CIPS logo and brand, and are listed in the CIPS directory.
Certified Commercial Investment Member (CCIM) ANS -This designation is designed for brokers, leasing
professionals, investment counselors, asset managers, appraisers, property managers, developers,
institutional investors, commercial lenders, attorneys, and bankers, among others. CCIM curriculum
covers ethics, interest-based negotiation, financial analysis, market analysis, user decision analysis, and
investment analysis for commercial investment real estate.
Certified Property Manager (CPM) ANS -Geared to real estate property management specialists,
designees handle all forms of management from residential to commercial to industrial.
Institute of Real Estate Management (IREM) ANS -This organization offers the CPM certificate. The
designation is recognized by the National Association of REALTORS® and considered to be among the
industry's premier real estate management credentials. More than 8,600 professional real estate
managers hold this designation worldwide. CPM members manage approximately $900 billion in real
estate assets.
Associations ANS -Association membership is another way to obtain advanced training. Many national,
state, and local organizations provide opportunities for training, developing industry standards,
