Homework time, friends. On January 1, 2013 a new 3.8 percent tax will take effect on some investment income including real estate transactions. It's going to be important for you to clearly understand this tax, which is -- shock of shocks - complicated, which is why advise you to have a pow-wow with you own tax advisor.

I don't know about you, but I'm the kind of person who does better with real life examples. The National Association of REALTORS has put together a terrific brochure that outlines some scenarios in which the new tax will come into play. The link to the material is at the bottom of this post, but there are a few general things you'll want to keep in mind as you read.

First, where did this thing come from? It was passed by Congress in…

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One of the bits of lingo you'll see tossed around in real estate investing is "1031 exchange." This is one of those topics that is as complicated as you let it be. Smart investors -- which is what we all try to be -- have smart accountants. If you don't have one of those guys? Go find one. That said. Here are the basics.

A "1031 exchange" is a federal tax designation. (Yeah, I know makes my eyes roll back in my head, too.) Essentially it allows you, the investor, to sell Property A and buy Property B without losing money to a capital gains tax. Normally, you'd be looking at 15%   loss on capital gains, so the exchange lets you hold on to more money to keep your investment (aka property) portfolio afloat.

The requirements to qualify for a 1031…

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On August 12, Shonda Novak wrote a piece for the Austin American-Statesman looking at what the headline called "soaring rents" and "occupancy rates" that make our apartment market the "hottest in [the] nation." I don't know about you, but those are the kinds of phrases that get my investment blood pumping. Essentially, our apartment market is right up there with big hitters like San Jose, California; San Francisco; Portland, Oregon; and Seattle. Those are all major "destination" cities and we're keeping pace. Why?

The short answer? Job and population growth. Pair that with a limited inventory of apartment units currently being built, and you're going to have some happy landlords who have every justification for reasonable rent increases. Note the use…

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Well, folks, if you've had the TV on for the last couple of days, or just follow the stocks on your phone, this won't come as a surprise. Mark Dotzour, chief economist and director of research at the Texas A&M Real Estate Center says the world is coming to an end. -- Sorry. Couldn't resist. -- Actually, he told the attendees at the Real Estate Council of Austin's annual economic forecast event last week that the U.S. is in serious trouble. Obviously, he's right. Does it mean "our world" is ending? Maybe, maybe not.

Using a ship at sea as his visual, Dotzour showed the U.S. firmly afloat in 1996, but taking on water and listing since 2003. He believes we'll capsize in 2012. Citing recent layoffs like those at Cisco Systems Inc., he said companies are…

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Over the past couple of months, we've been closing deals right and left with no end in sight. I'm certainly not complaining, and I suspect you aren't either. The real estate market in Austin isn't just bucking the national trend, it's operating in its own positive bubble. The time couldn't be better for smart investors, and we want to make sure we all stay smart. To that end, let's talk about cap rates.

I run into investors all the time who say, "I only want to see properties with a 10% cap or better." Their focus is so completely on "the cap rate" they've got laser beams coming out of their eyes. In the Austin market, you can certainly find cap rates upwards of 10%, -- Yet, at the end of the day, as I've said many times before, those investors who buy…

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On Wednesday, July 20, Shonda Novak wrote a piece for the Austin American-Statesman some of you might have seen, "Central Texas Existing Home Sales up 9 Percent in June; Median Price Still at $205,000." I think I've made it clear I'm a big proponent of education for real estate investors, which includes scanning the relevant news. (Seriously, if you haven't looked into a news reader for your smartphone, take the time to do it.)

While the headline on this piece pretty much says it all, there are some things from the text that are worth pointing out. We are bucking the national trend here in Central Texas and Austin specifically. Now, that's not to say the market is completely out of danger, but Austin is a big draw city -- for retirees, as we pointed…

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Earlier this month, Andrea V. Brambila reported on the Top 10 Real Estate Boomtowns for Inman News, a leading source for independent real estate news for industry professionals and consumers. The basis for the projections about hot real estate markets as based on population estimates from ProximityOne, a firm specializing in demographics used for decision-making and goal-setting.

When all the numbers were crunched, they forecast population growth of 8.9 percent for the U.S. from 2010 to 2020. That means the country will likely have a population of 337.1 million by the end of the decade. This takes into account information from the 2010 census as well as patterns in the historical data on national birth, death, and migration trends.

The census tracked a…

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We all know that downtown Austin has seen some explosive growth over the last decade. Developers have put up office towers and high rise condos, the bar scene has exploded, and lots of live, outdoor music gets pumped into the night. (Not always to the pleasure of the neighbors.)

But there have been problems in the middle of all that energy: an ongoing homeless presence, a need for noise control, and a lack of affordable housing on site for the people who actually work downtown.

This is an area with vast economic potential. We are talking serious numbers:

- An assessed value of $4.3 billion,

- Downtown tax revenue of almost $75 million,

- Private investment in the neighborhood of $1.5 billion to $2 billion,

- And additional investment by…

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This week I'd like to talk shop a bit. As investors we're going to be in the position to both buy and sell. Given that, we need to understand some of the mechanics of the process from both sides of the fence, client and real estate professional.

Without telling tales out of school, let me share a story. An agent representing a buyer negotiated a contract on a property where the owner had been through several listing agents over the past year.  Red flag number one.  They submitted an offer $15K less than the asking price, which was at the high end of the realistic price of the property.  After much negotiation, an agreement was met and the property was under contract.

The appraisal came back exactly $15K less than the asking price. Red flag number…

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Thanks to all who have emailed asking if I have specific advice for folks who are new to this game. Here's what I tell first time real estate investors they need to do.

1. Find a lender -- one with experience doing investor loans.

2. Find an experienced agent who specializes in investment properties and who is willing to provide the background data you need to make an informed decision as well as educate you.

3. Pull the trigger. Make the purchase. Don't condemn yourself to the land of "woulda, shoulda, coulda."

Those are the broad strokes. Now. A few fine points. Before you ever buy a property, you have to get into the mind space of being a landlord. Far too many first timers think this is just a matter of buying a property and turning it…

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