6669

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Pros to doing this:

-There’s pretty much zero barrier to entry. Anyone with $50-$100 can invest.

-It’s also really easy to buy into a REIT…open up any stock trading (4) _________

or app, and boom, you’re done. You don’t need to go out looking for (5) ______

that cash flow for weeks or months.

-There’s also no (6) _____________aspect of this. With a REIT you don’t do ANYTHING. You just buy it and forget it…done.

-It’s also really, really easy to sell…no need to pay a 5% (7)__________, no need to show your home to buyers, no need to negotiate prices…it’s just as easy as buying a REIT. You just click “sell” and you have y our money almost immediately. -With a REIT, you’re really well diversified.

Negatives:

-How the income YOU get is (8) _____________…you g et paid in the form of a dividend. This is usually an amount that’s paid out quarterly, but it’s taxed as though it’s earned income, which means it’s taxed a t your highest marginal

(9)___________.

-Because REITs pay high dividends, they usually don’t increase much in price.

-The third downside is that you don’t have any (10) ____________over your investment…unlike a property where you can pick the color to paint the walls, how to remodel the property, or how to (11) __________ the property and how much to rent it for - with a REIT, you have zero control.

-You also can’t build equity in a REIT like you can with real estate.

Investment Real Estate Downsides:

-High barrier to entry…you generally need a large d own payment and will need to have the income to support the loan payments.

-The second (12) ____________ to owning real estate is the time commitment. Finding the right deal is essential - and it can take a lot of time. Then you have the time aspects of managing a rental property.

-Lack of immediate liquidity. I can’t just sell my property for top dollar within a day - it just doesn’t happen.

Rental Real Estate upsides:

-You can (13) _____________ your money. While yes, a REIT does invest in leveraged properties and you own a portion of that, generally the returns aren’t as high as when you do it yourself.

-Your income from rents is generally tax free. When owning physical real estate, you can depreciate the cost of the property against your rental income. Compare this to paying 22-37% taxes on dividend income.

-You have total control over your investment. This means you can find a really, really good undervalued (14) ___________where you make a significant amount of money.

-You’re able to borrow against the equity in your home - completely tax free.

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So at the end of the day, this is what it really comes to…

If your goal is long term equity, owning physical real estate is the way to go. When you buy an investment property, you’re continuously building equity in a tangible (15)__________. Having more equity in your asset also gives you the ability to refinance over time and use the proceeds to buy additional assets and grow your portfolio. More work, more time involved, more money long term. However, if you have a little money and want some exposure to real estate, a REIT could be a nice way to diversify. However, since dividends are taxed as ordinary income, it’s best to hold the REIT in a tax advantaged account like a 401k or Roth IRA to avoid paying taxes. This way you get all the (16) __________of having exposure to real estate, without the tax consequences of paying a stupid amount of taxes on it. Not financial advice ;)

Suggested reading:

The Millionaire Real Estate Agent: http://goo.gl/TPTSVC Your money or your life: https://goo.gl/fmlaJR

The Millionaire Real Estate Investor: https://goo.gl/sV9xtl

How to Win Friends and Influence People: https://goo.gl/1f3Meq Think and grow rich: https://goo.gl/SSKlyu

Awaken the giant within: https://goo.gl/niIAEI

The Book on Rental Property Investing: https://goo.gl/qtJqFq

2.Discuss the ideas of the video with your group mate

3.Present your ideas in writing

Unit 4 Renting

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“Generally speaking, the length and grandness of a hotel’s name are an exact opposite reflection of its quality. Thus the Hotel Central will prove to be a clean, pleasant place in a good pa rt of town, and the Hotel Royal Majestic-Fantastic will be a fleabag next to a topless bowling alley”. (“Mi ss Piggy’s Guide to Life”, 1981)

6.Before reading the text match the followin g words with their Russian e quivalents:

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Text 1

Guide to Renting

Renting a property has never been easier. To help you we have put together a simple guide to take you step by step through the process of finding your new home

(1)__________________

•Whatever your previous experience or if it’s your first move, your letting agent will try to make it as easy and trouble free as possible.

•Be as clear as possible about what you are looking for.

•Have a budget in mind.

•Make sure your agent is always looking out for the right property for you as they can go very quickly.

(2)___________________

•Renting has never been easier, and with house price continuing to rise, renting can sometimes be the best thing to do, particularly if you are saving for a deposit.

•When it comes to finding a property, try web-based tools such as the haart Property Search facility, as this will help you find the right type of property in a matter of seconds.

(3)_________________

•A tenant always pays a deposit before moving in to a rental property.

•If handled correctly, the deposit remains the property of the tenant until the tenant leaves the property.

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•It is recommended that this amount be held by the letting agent whether they are managing the property or not.

•It should not be used for any purpose other than as stated in the agreement.

•Make sure any agent you use is a member of the Association for Residential Letting Agencies and subscribes to their code of practice.

•Always look for a letting agent that carries the SAFEAgent kite mark such as haart as this will ensure that your deposit is protected at all times.

(4)________________

•When you find a property you like you will need to be ready to provide references and a deposit.

•You then need to concentrate on the move itself getting in touch with utility providers to arrange your gas and electric connection.

•You also need to think about insuring your possessions.

(5)_________________

• If you have any questions whatsoever about any aspect of renting, the staff at our company will be only too pleased to help you.

7. Match the numbers and the titles of the paragraphs:

aRental costs

bBenefits of renting

cFirst steps to finding the right property

dExpert advice

eThings to remember

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Text 2

Guide to Letting Agents

•Before you do anything make sure any letting agent you use is a member of the Association of Residential Letting Agencies (ARLA) and subscribes to their code of practice like haart does.

•Make sure that properties available to (1)____________ are listed on an easy-to-use website and regularly (2)______________. You can then quickly see if the property is worth viewing before agreeing to give up any of your (3)___________.

•If you want a property quickly then leave your (4)____________ and requirements with all the local agents.

•If an agent has nothing (5)__________ immediately, they will usually put your details on file. If you are not successful in the initial stages of your search, contact your (6)__________ regularly to see what is available.

•Rental properties are in huge (7)___________, so phone everyday if you want to know about what is and isn’t available.

•If you do find a suitable property and the property has been on the market for longer than expected then the landlord may consider reducing the (8)_______.

•Letting agents will charge for checking your references, preparation of inventory, drawing up tenancy agreements and administration costs, etc. (9)______ on the area in which you are living, agency and property charges can amount to £200-£500. Make sure that they don’t charge you for looking at properties or holding your details.

•A deposit is always taken from a tenant prior to the moving in date in line with the Tenancy Deposit Scheme (part of the Housing Act 2004). The deposit remains the property of the tenant throughout the tenancy and it is (10)__________ that the money is held by the letting agent. The agent will not release the funds until the landlord is satisfied with the check out report at the end of the tenancy.

•haart is a member of The Dispute Service (TDS), an independent not-for-profit organisation founded in 2003 to resolve disputes in the private rented sector.

•Always look for a letting agent that carries the SAFE Agent kite mark such as haart as this will ensure that your deposit is protected at all times. haart are members of the National Approved Letting Scheme (NALS).

2. Fill in the blanks with the words in the box:

agent ; available; demand; Depending; details; price; recommended; rent; time; updated;

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1.Watch the video “Which is Cheaper: BUYING or RENTIN G a house?” by Graham Stephan https://www.youtube.com/watch?v=F3PIObPVRPk

While listening to it, fill in the blanks.

Which is actually cheaper, buying or renting a house? Let’s crunch the numbers to determine which is actually less expensive, and which factors to consider in order to determine which is right for you.

assumptions; benefits; depends; downside; invest; market; misconception; more; mortgage; net; owning; payment; plan; renting; responsible; tax;

I think there’s a common (1)___________ that buying is always the better choice, and that renting is just throwing money out of the window. But you can’t deny that many high-profile people just end up (2)__________ their homes…why is this?

Let’s first start with (3)_________ a home. Many people just look at the cost of rent, then look at the (4)_____________ payment - see it’s maybe a little more, but think “I can own this for just a little bit more, buying is a waste!” However, the actual cost of owning is home is much greater than just your mortgage (5)___________. You also have property taxes, insurance, and repairs to take into consideration - not to mention the opportunity cost of the money that you (6) into your home.

Purely for cash flow purposes, renting is usually (7)___________cheaper. Even though you don’t get the tax (8)___________ of owning, usually renting and investing elsewhere is cheapest month-to-month out of pocket. Not only is it “cheaper” for cash flow purposes, but you have the mobility to pick up and leave when your rent is up. You’re not (9)__________ for maintenance. You don’t need to bother selling it when you’re done. You just pick up and go. You can also invest your money invested elsewhere, potentially making you even more money.

But in terms of (10)____________ cost over 7 years, the lease will cost you MORE than owning a home, realizing the tax benefits, seeing some appreciation, and paying down your loan.

So what’s the advantage of renting?

First of all, this assumes the (11)__________ goes up over 7 years…if the market is about the same price or drops, you’ll actually come out AHEAD by renting. You’ll also come out ahead by renting if you can make more than a 12% return on your down payment elsewhere. You’ll also come out AHEAD by renting if you’re only going to live in the home for 1-3 years and (12)_________ to sell it, unless you get lucky with a rapidly appreciating market. So it takes a lot of averages and (13)_____________ to really decide which one is better.

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The biggest (14)___________ I see with buying is that it ties up capital that COULD be deployed in a business that would generate higher returns. For someone who only wants to buy and live there a few years and sell, it’s dangerous to assume the market will continue going upward in a short period of time. So the “cost” of renting is sometimes much cheaper than just owning the home for a few years.

BUT….for those who plan to live in their home for ( 15)__________than 7 years or so, generally speaking buying is better. You basically lock in your cost of ownership by buying - you won’t have rent increases, you won’t h ave a landlord telling you what to do, and you have total control over the property. You also get the (16)__________benefits of owning and you can build up equity in an appreciating asset.

However, you’re tying yourself down and if you decide to sell after a year or two, you’ll likely take a loss unless your market appreciates in price enough to make up the closing costs and commissions. But long term, owning will be cheaper if you intend to live there long term.

So like I said, determining which is cheaper really (17)____________ on quite a few variables - short term, it’s generally better to rent. Long term, it is generally better to own. And the longer you stay in a property, the more it usually makes sense just to own it.

Suggested reading:

The Millionaire Real Estate Agent: http://goo.gl/TPTSVC Your money or your life: https://goo.gl/fmlaJR

The Millionaire Real Estate Investor: https://goo.gl/sV9xtl

How to Win Friends and Influence People: https://goo.gl/1f3Meq Think and grow rich: https://goo.gl/SSKlyu

Awaken the giant within: https://goo.gl/niIAEI

The Book on Rental Property Investing: https://goo.gl/qtJqFq

3.Discuss the ideas of the video with your group mate

4.Present your ideas in writing

Activity 4

1. Read the text “Guide to Tenants Rights”. While reading make the notes in the margins:

“+”- facts about real estate that you knew before

“-“- new information that you have found in the tex t

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“?”- the things in the text that you don’t quite un derstand

Text 3

Guide to Tenants Rights

When renting a property it is extremely important to know your rights. Our guide to tenants rights will help outline what is the responsibility of the tenant and what is the responsibility of the landlord

(1)____________

• Most people who rent their home are in an assured shorthold tenancy (AST), but other agreements do exist which have different levels of rights.

(2)_____________

•Since February 28, 1997, a tenancy will automatically be an assured shorthold tenancy provided the tenant is a private individual who pays rent (totalling less than £100,000 p.a.) to a landlord who does not live in the same building. The property needs to be the tenant’s main residence.

•This will also be the same if they moved in after 15 January 1989 and were given a notice informing them they were assured shorthold tenants.

•The law provides basic rights and other conditions may be added into the tenancy agreement to be signed by the tenant and landlord.

•A tenant has the right to live in their home without being disturbed. The landlord and other people cannot enter freely when they wish and must seek permission to visit – typically at least 24 hours at a mutually convenient time.

(3)_______________

•An agreed rent must be paid on time or landlords may take court action to have tenants evicted.

•Landlords are required by law to carry out repairs that keep the building in good condition, keep gas, electricity, heating and water equipment up to scratch and do other agreed work.

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•Landlords must by law do repairs to keep the building in good condition, keep gas, electricity, heating and water equipment up to scratch and do other agreed work.

•Landlords must have a valid gas safety certificate for every gas appliance and furniture should be fire resistant.

•Tenants are responsible fo r looking after their home, which includes keeping it clean, and simple tasks such as cha nging bulbs and fuses.

•If repairs need to be done, tenants should inform the landlord. If the landlord refuses to do them it may be possible to force them to.

(4)_______________

• A tenancy runs until it is ended by a tenant, or a landlord, throu gh agreed surrender of the property, a notice bein g served, or eviction carried out.

•Tenants within a fixed-ter m can only end the tenancy during that time if their tenancy agreement says so. This will depend upon the agreed notice period.

(5)_______________

•With rights come respons ibilities and tenants must keep within the terms of their tenancy agreement, which m ay have specific clauses inserted.

•General conditions mean r ent should be paid, in full and on-tim e, bills sorted, good care taken of the property, t enants and visitors must behave respon sibly, permission be granted for access when nee ded and requests be made for any repairs or extraordinary occurrences.

•Tenants should not leave t heir home empty beyond a certain period of time, usually up to a fortnight, without wa rning the landlord.

5. Matc h the numbers and the titles of the p aragraphs:

aAssured shorthold ten ants

bNotice and eviction

cRent and repairs

dResponsibilities

eTypes of tenancy

Work in small groups to d iscuss the contents and design of the website and produce a paper version o n it.