A Ray of Hope for Immovable Property Investments, pt.2
Investments in land can also comprise putting money in open expanses that will be later developed by developers to convert them into houses and necessary amenities. The price of the land thus developed will be enhanced. If the land is in an area where the development phase is past, it will gain more appreciation and hence cost more than if it was in an area less developed and hence less preferred.
The ideal situation for profits would arise when the supply of land becomes limited. The purchaser then can sell the land at a high price. The profit will be more if the latest amenities at par with those of world class are provided here. The price and implications of tax thereon will be different for residential and commercial properties.
Investments in land are long-term profiting; unlike most real estate buys or purchase of homes; which give quick returns. The drawback here may be in the form of environmental issues that arise when environmental groups protest against the lack of suitable care in this direction.
A real estate mortgage investment conduit, or REMIC, as it is popularly referred to, is used when the mortgage loans are combined and securities backed by mortgages are issued. They are used for the security of the residential mortgages in the U.S. Investments in qualified mortgages are permitted. Examples of the same are mortgages of single or multi-families, mortgages that are commercial in nature, second mortgages, participations in mortgages and securities that can pass-through federal agencies. Due to the Tax Reform Act, the arrangement of a REMIC is such that the mortgage-backed securities are sales of assets minus the loans that were previously shown on the balance sheet of the previous lender. Here, REMICs are exempt from tax at entity level, but whatever income is earned by investors is liable for tax deductions, though exempt from Federal taxes.