In a market like the one we are currently experiencing, that special spot under the dresser would be my choice to invest some money for future growth, that is if real estate wasn’t around. Presently, there are many types of processes families and individuals can dive into to try and invest some money for future growth. Today, we have stocks, bonds, CDs, annuities, high-yield savings accounts, and of course you’re everyday piggy bank.
Investing in real estate is my number one choice, and for that matter, my only choice, when it comes to building a highly successful portfolio that has the potential of retiring future generations in my family. Why is it that I pick real estate, especially considering what has been going on in the markets the last few years? The answer to that is very simple, it has more moneymaking options for me, 3 in particular.
To save me money immediately, I can purchase the property using other people money. I can acquire purchasing capital 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 obtain a lease option contract with a seller, promising him or her more income than just normal rent. Lastly, 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 with no other exchange.
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: As we are providing public housing to families, the government provides investors with tax benefits and write-offs. You can write off expenses such as: car, office, home, damages, trips, meals, clothing, supplies, etc. Really a dizzying amount of write offs. Remember to contact a Certified Public Accountant for more details.
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.
Related posts:
