In today’s market, it is often difficult to decide upon the avenues for families and individuals to jump into investing some money for future growth. There are stocks, bonds, CDs, annuities, high-yield savings accounts, and of course you’re everyday piggy bank or that special spot under the dresser! If the real estate wasn’t around, that special spot under the dresser would be my choice in a market like the one we are currently experiencing.
Because real estate has more moneymaking options for me, investing in real estate is my number one and only choice when it comes to building a highly successful portfolio that has the potential of retiring future generations in my family. There are 3 options in particular.
I can purchase the property using other people money: Saving me money off the bat, I can buy a home using money from; a conventional lender, like a bank; a hard money lender, whom only looks at the profitability of the home you are buying, and does not inspect any personal information or finances; I can do a lease option contract with a seller, promising him or her more income than just normal rent; I can do a trade out, which is when I have a property, and if the seller agrees, we can trade our properties out right and call it good.
Rental income and equity growth: Lets say I purchase a home valued at $80,000.00 using hard money for to cover 25% of its value (or $20,000.00 ). Hard money notes usually carries a higher interest rates, so a goal for me is to get conventional financing in six months or so. I rent out the unit for $1,100.00 which covers my $900.00 monthly payment and tax. Utilities are now paid by the renter.
Imagine if I did the following 10 times a year: After six months, I go to my lender and get a cash out refinance. (Remember, I am not paying for anything now that it is rented). Assuming that (at this time) the actual worth of the property is $130,000. Since I always buy homes under appraisal value, a cash out refinance at 80% would give me a loan of $104,000. This is enough to pay off the $60,000.00 balance of my hard money loan, recoup my $20,000.00 down payment, and pocket $24,000.00 earned. Remember that I still own the home and have it paid for via the renter!
Business tax savings: There are a huge number of investors tax benefits and write-offs available to real estate investors providing public housing to families. Write offs include, but are not limited to expenses such as: car, office, home, damages, trips, meals, clothing, supplies, etc. Remember to contact a Certified Public Accountant for more details and to assure those write off you use are legitimate.
I love investing in real estate because of my income potential, but the most important aspect of all of this is that fact that we are putting families into homes, and then helping them through the buying process for them to become the actual homeowner. Always use the pay-it-forward program in everything that you do, and the money will always come!
Good luck and see you at the top.