Ethical investing is a bit of a buzz word. Get ethical and make money. However when you look behind the buzz there are powerful reasons why you should consider ethical real estate investing in 2008 as one of the best investments you can own. Because ethical real estate investing is still investing, and you need to make a good profit. Ethical investing should be high profit investing so that everyone, including the investor, wins.Real estate investing in 2008? Haven’t you got to be kidding I hear you ask? Real estate investing in 2008 is dead. Prices are crumbling and real estate can’t be given away. There’s Florida McMansions on eBay for starting bids of $1.Don’t let that put you off, real estate investing in 2008 is alive and well, if you do it right. Note I said that have to do it right. If you don’t then you can get burned.Can you do it right on your own? Yes, if you’re really good at it. However there’s a far better way to do it through a publicly traded US company run by one of Americas most respected businessmen, investing in socially conscious real estate.Socially conscious real estate investing? What’s that?I’d like to show you one of the best ethical real estate investments that you can own in these hard times.It’s ethical real estate investing that offers benefits to other people as well as the investor, specifically the people who live in the investment properties and the community.Let me explain further. One of the best real estate investment opportunities is investing in average homes for average Americans in who live in average suburbs in those cities that go together to make up our country. Homes with values of $100,000 or less, that millions of people live in right now. Homes that are STILL in demand even in the middle of the credit crunch, because – people still need to live in them.Imagine a company that selects the most promising suburbs for investments, buys large numbers of homes in those suburbs from government our councils at well below market, invests in those suburbs by building social resources like parks and playgrounds and other improvements to improve the overall living standards of those who live there, and refurbishes the houses they buy to a high standard.All this increases the attractiveness of the suburb to live in, and at the same time increases the value of the homes in those suburbs. They then sell those homes to investors at well below market value, organize the loan, provide the tenant, guarantee the repayments of 2 years, and the investors profit.And the local community profits big time too, because of the renaissance created by the newly refurbished homes and community facilities, so everyone wants to live there.It’s socially conscious real estate investing on steroids. The investor profits, the local residents benefit, and the tenants of the properties benefit.It’s real and it’s available right now for ordinary investors, or IRA or 401k investors, from a respected US public company.

Real estate investing is easy. That’s what all those tv reality shows would have you believe. But in reality, real estate investing is risky business. And like most investments, the riskier, the higher the return. It’s true that the returns on investment are incredible for the savvy real estate investor. If you do your homework properly, a little cash and some sweat will buy you a property that can be flipped for a healthy profit. However, there are many that have lost lots of money in real estate investments because they were not careful in planning stage. There is a very steep learning curve for those starting in real estate investing. Here are some things to keep in mind before you get started on your journey. The first investment you should make is that of time. Take your time to determine what are your financial goals and the time frame in which you want to achieve them. Remember to be realistic. With the current real estate market, chances are you will not become a millionaire in six flips. Today, more than ever before, the beginner investor can get burned and lose a lot of money in the process. Just like with any business venture, you should write down a business plan. Determine how much time and financial commitment you are willing to give to this business. Make a five year plan with detailed goals, particularly for the first year. Review this plan after six months and again two years later. This will help you stay on track. Your financial commitment is a crucial element of that business plan. Estimate how much money you have to invest. This amount will differ if your first investment is your primary residence or a flip property. If you only have limited capital, say $10,000, then your best option may be to buy a home for yourself to renovate and sell within a year or two or to buy a quick flip ‘fixer upper’. In some places, you can get financing for a second property with no money down as long as you have good credit and money for the closing costs. This is a risky proposition because the lending costs will be high. You would have to buy and sell quickly, and the real estate market would need to be in an upward climb. You should be mindful of the legal and tax consequences of this type of financing for your investment. The alternative would be a regular mortgage or private financing where the loan would cover the cost of the purchase and maybe some of the renovations. Your homework on the property and the market will be extremely important because you stand to lose big. You will be legally responsible for the whole amount of the loan if something goes wrong. Another important aspect of your business plan will be to determine what level of risk you are comfortable with. Be honest with yourself and write down how much risk you are realistically willing to take. If you are normally very careful with your investment and try to always protect your capital, don’t try to get into high risk real estate investments. Another important aspect of your plan will be to decide how much time you are willing to commit to this. Will you be doing the renovations yourself or supervising contractors? Now would be a good time to start establishing relationships with lenders and contractors. Learn about the market in the area you are looking to invest. Familiarize yourself with the contracts, insurance, tax impacts and legal requirements of real estate investing. With some careful planning and homework, you too can generate a healthy additional income from real estate investing. You may even be able to make it a full time job. Real estate investment is one of the highest paying investment there is. Look at it as an adventure. Be willing to learn and make mistakes and you too can make money investing in real estate.

From a historical perspective, investing in real estate is almost as old as the construction of property itself. Indeed many business owners who created their wealth through companies then went on to diversify into real estate investments. In fact, over the years real estate investments have produced similar returns to those found in the stock market. Let’s take a look at some of the reasons:

First of all, and most obviously, the supply of building land around the world is limited, even when taking into account landfill opportunities. Since the world’s population is growing and the demand for housing ever increasing, then there would seem to be a never-ending and increasing requirement for real estate of all types.

Now let’s take a look at the mechanics of buying property. Here it can be seen that investing in real estate is quite different from most other traditional investments such as stocks. With real estate you can often borrow up to around 80 percent of the value of a property, sometimes even the full value and beyond under special circumstances. Thus a more modest investment of say 20 percent of the value can be used to buy and control the full value of the larger investment. Naturally, if the value of your investment increases, I.e. property prices rise, then the value of your real estate investment also increases. If so, then you are into profit, including that on the money you originally borrowed.

Naturally, there will be costs associated with real estate investing (such as legal fees and property maintenance, taxes, etc), but these are usually small in comparison with the potential gains.

Borrowing in order to invest in real estate makes real estate a type of leveraged investment. But if you know anything about leverage, you will realize that leveraged investments can also go against you. What, for example, if the property you purchased for $300,000 decreased in value to $240,000? Even though the value only dropped by 20 percent, you actually lose 100 percent of the original $60,000 investment. And if you have a mortgage on this property making up its full purchase price, you will actually need to pay money to the mortgage provider in order to cover the costs of selling the property. That’s in addition to the loss of the whole of your initial investment.

So, as you see, investing in real estate is something to be taken very seriously and should not be done with money which you might need for other things in the near future. Investment in property is more secure as a long-term investment. In the above example, if you could have held onto the property and not sold it, the loss would purely have been ‘on paper’. In all likelihood, over time the value of the property, unless grossly overpriced when you originally bought it, will rise and you will likely not only recover the full value of the initial investment, but also possibly make a nice profit when you do come to sell.

Another reason that real estate is a popular investment is that there are profits to be made from it whilst you are the owner. In addition to the tax-saving benefits (in that any tax due on the property’s increase in value doesn’t become due until it is eventually sold), you can also make additional money from renting out the property. This can often cover all your running costs of the property, plus providing a profit on top.

Unless you make a large down payment, early on during your ownership the monthly operating profit from your property business is likely to be small or non-existent. But over time this profit will increase as the amount of rent you can charge increases at a higher rate than the running costs. Naturally these profits will be subject to normal income tax rules.

A further benefit of investing in property is that you might be able to purchase cheaply a run-down or ‘distressed’ property and fix it up or develop it further. Properties like this can still be found if you look around carefully. Naturally, investing in this type of real estate can still produce large gains. This is something you certainly can’t do with traditional stock market investments.

However, returning to the initial question about whether real estate investing is still a viable option when current prices seem to be nearing their peak: yes, it can still be so, but you might need to be more creative and prepare to be in for the long haul. Property ‘flipping’ methods that worked extremely successfully yesterday, might not work at all well tomorrow.

You might also consider diversifying into overseas real estate markets. Whilst this will require greater study and analysis, and there are many more legal issues to consider, seeking out what appear to be undervalued international real estate opportunities has the potential to be highly profitable if handled correctly.

Naturally, you should always seek the advice of professionals, both financial and legal, before investing in properties of any description, particularly when considering investing overseas. There might be major implications to your overall taxation. Risks can also be substantially higher when you are not there to oversee your investment in person.