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Investment Home Homebuyers

What are the tips to successful Real Estate Investing?

Statistics show that most American’s, upon reaching retirement agent, did not save enough money to live a comfortable retirement lifestyle that is similar to the income and lifestyle they enjoyed during their working years. If you started early enough, you can enjoy living in your home mortgage free and investing in a home of your own provides you with a sound real estate investment in its own right. However, what if you need to have steady cash flow coming in at all times and your retirement savings, 401k plan, Social Security and other sources do not provide sufficient income? Consider real estate investing as a sound strategy for your long term cash flow needs. It, over time, has proven to be a safe investment, that offers tax advantages, leverage, and income. It is a “long term view” and is not to be viewed as “quick cash” with quick turn around times. Best of all, you do not need a lot of money to be a real estate investor. It uses the concept of “OPM”, using “Other People’s Money” , i.e: leveraged and borrowed money, by which to create steady cash flow and wealth for yourself and your loved ones.

Lower Your Taxes

Tax incentives for real estate investors can often make the difference in your tax rates. Deductions for rental property can often be used to offset wage income. Tax breaks can often enable investors to turn a loss into a profit.

For which items can investors get tax breaks? You could claim deductions for actual costs you incur for financing, managing and operating the rental property. This includes mortgage interest payments, real estate taxes, insurance, maintenance, repairs, property management fees, travel, advertising, and utilities (assuming the tenant doesn't pay them) These expenses can be subtracted from your adjusted gross income when determining your personal income taxes. Of course, these deductions cannot exceed the amount of real estate income you receive. In addition to deductions for operating costs, you can also receive breaks for depreciation. Buildings naturally deteriorate over time, and these "losses" can be deducted regardless of the actual market value of the property. Because depreciation is a non-cash expense -- you are not actually spending any money -- the tax code can get a bit tricky. For more information about depreciation and various tax alternatives, ask your tax advisor about Section 1031 of the U.S. Tax Code.

Have a Positive Cash Flow

There are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax positive cash flow occurs when income received is greater than expenses incurred. This sort of situation is difficult to find, but they are usually a strong and safe investment. An after-tax positive cash flow may have expenses that outweigh collected income, but various tax breaks allow for a positive cash flow. This is more common, but it is generally not as strong or safe as a pre-tax positive cash flow.

Regardless of what kind of real estate you choose to invest in, timely collections from your tenants is absolutely necessary. A positive cash flow -- whether it is pre-tax or after-tax -- requires rental income. Be sure to find quality tenants; a thorough credit and employment check is probably a good idea. Please see our services under the Landlord Page, where for a small fee, we will do some of the screening work for you.

Use Leverage

One of the most important factors in determining a solid investment is the amount of equity you are purchasing. Equity is the difference between the actual worth of the property and the balanced owed on the mortgage. There are some cases, where you can buy a 3 or 4 family house with as little as 5% down, and that is excellent use of leverage!! However, most 6 family homes or above, will typically require 20% down or more of the negotiated sales price.

The key to real estate investing is to not fall in love with the property, and treat it like a business. You are not falling in love with a mutual fund or bonds, so your perspective needs to be the same when dealing with investment properties. You may initially be nervous so please read some great resources for investing via these web sites: http://www.reiclub.com/ as well as http://www.legalwiz.com/ and other sites like: http://www.creonline.com/ as well as http://landlord.com/.   Check out the article on this web site on the "Handy Man Special Page", as we as the article on buying Bank REO properties.

Benefit from Growing Equity

While investing in real estate is relatively complex, it is often worth the extra work. When compared to other financial investments, like bonds or CD's, the return on investment for real estate purchases can often be greater.

The key to real estate investing is equity. Determine an amount of equity that you want to achieve. When you reach your goal, it's time to sell or refinance. Your perspective in buying an investment property is to buy it with enough built in equity up front. A substantial amount of equity needs to be gained in the acquisition.  The idea is to buy a good deal of your profit upfront.  In today's market, if you are able to buy a substantial amount of profit upfront,
you are not completely betting on appreciation over time.   If you hold properties long enough history tells us that properties  should appreciate, but why not reduce the risk.  The question then becomes  "how do I find properties that represent my best opportunity for built-in profit?"   Real estate investing is competitive and working with real estate pros, such as myself,  that spend much of their time in finding properties with built-in equity is essential.
The U.S. Census Bureau reports that over the past 35 years the average price
of a single-family home in the United States has appreciated an average of 6.73 percent
each year.  Even with downturns in the market, over time, real estate has always gone up.
But why not reduce some of your risk and buy as much of your profit as possible on the purchase?  Remember, you make your profit when you buy, not when you sell. When you sell, you are merely harvesting your profit, but profit comes from buying with some built in equity in the first place.  You should also have an exit strategy for your property up front.  All savvy investors understand this principle.

Your decision to buy an investment property is both a sound financial decision and a commendable achievement. As your real estate agent . . .

· I will lead you through every step of the exciting home buying process.

· I will help you define your "wish list" of features you want in your investment home, your neighborhood and your school district. That which is attractive to your tenants will keep you the landlord, never vacant.

· I will walk you through the mind-boggling financial details associated with buying a home, including understanding the various mortgages and home buying programs available to you. I will walk you through some special programs that are specific to investors only. It is difficult in today’s market economics to buy investment property that have positive before tax cash flow. I will work very hard to help you locate properties with positive cash flow. This will take time and looking at many properties.

· I will monitor all new listings and alert you to new houses as soon as they are put on the market. Any serious investor will want to see the numbers first, and then visit the properties in question. I will only show you properties that have upside potential to limit visiting hundreds of properties unnecessarily.

· I will help you do a solid cash flow analysis to show you properties that only provide solid cash flow.

· I will help you negotiate with sellers in a “win-win” situation for both you and the seller.

· I will eliminate the stress involved with buying a home or mixed use property by putting my years of real estate experience to work for you.

Finding the perfect home is my business. Contact me today!