|
|
| |
|
 Invest
in Your Home- Invest in Your Future
 WHY
INVEST IN REAL ESTATE?
Investing in real estate
is one of the most fundamental ways for you to diversify
your overly stock weighted portfolio. It can provide
you with the perfect opportunity to control the success
of your own investment. Buying and managing rental
property is one of the simplest means for the hopeful
entrepreneur to start a small business. The concepts
are quite basic and the business plan can be just as
simple. There are many factors that you will need to
consider when evaluating what type of property is right
for you. However, the key objective should always be
the same: to find and purchase a property to be rented
at a competitive rate that covers the operating costs.
Over time, as the payments remain fairly constant but
rents steadily rise, the profits can become significant.
A property that pays for itself can yield huge returns
over the long term and can provide its owners with
an
excellent stream of additional income.
There are four major elements of making money in real estate:
1) Cash Flow - Simply stated, this
is the difference between the income that a property generates in rent and the
expenses it takes to operate the property.
It is the most desirable type of profit in real estate because it can provide
you with an immediate cash return.
2) Tax Savings and Depreciation – Real estate investments have significant
tax advantages. Any losses that a property incurs over the course of a year may
qualify as a tax deduction. More importantly, even if your investment property
ends the year with a break even or positive cash flow, you still may be entitled
to a tax deduction. Investment property can be depreciated over time and the
amount of depreciation taken in any given year may be enough to offset a positive
cash flow, reducing the amount of tax you pay on that cash! Of course, everyone
has their own specific tax situation, so it is always best to consult your tax
advisor on how your investments will affect the amount of tax you will pay.
3) Loan Principle Reduction – Most mortgage loan payments consist of two
parts 1) a principle portion and 2) an interest portion. When you make your monthly
payment the principle portion actually reduces the amount of your loan balance,
which increases your equity in the property. In essence, your renters will actually
be paying for your increasing equity and at the end of the loan term, the property
becomes yours ‘free and clear’!
4) Appreciation – This is the most well known factor for making money in
real estate. It is the increase in a property’s value over time due to
economic changes such as increasing demand, decreasing supply of land and increasing
prices due to inflation. Many investors believe that real estate is an excellent
hedge against inflation based on its history of long-term steady growth.
Another very important concept to remember in real estate investing is leverage.
Leverage is the use of others people’s money in growing one’s own
portfolio and is one of the most overlooked considerations amongst the general
public. There are few other investments you can make in which someone else will
actually loan you the money for the purchase.
Consider an investment property that grows in value by 4% over the course of
year from $100,000 to $104,000. If the investor purchased the property with only
10% down, a 90% mortgage, and seller paid closing costs, his cash invested would
be $10,000. The general public would tend to view this property as yielding only
4%, without considering the impacts of leverage. However, we must remember that
the investor’s true return is based only on the amount he contributed.
The increase in value of $4000 divided by the initial investment of $10,000 yields
a 40% return. Quite a difference compared to the measly 4% without our good friend,
leverage. Of course this example has been oversimplified and does not consider
cash flow, tax advantages, and loan principal reduction, which could potentially
make the returns on this property even more favorable.
Check out our Property Search to find potential investment properties. Then use
our Investment Calculator to see if
the properties you found will bring you the
profits you’re looking for.
 IF
INVESTING IN RENTAL PROPERTY IS SO GREAT, WHY ISN’T EVERYONE DOING IT?
Most people will agree during casual conversation that investing in real estate
is one of the best ways to accumulate wealth. Unfortunately, most of the same
people that have these conversations will never buy a single investment property.
The general public has a fear of risk taking and the unknown. People
are typically
afraid of things that they do not understand. The truth is that real estate investing
can be one of the safest investments one can buy. We’d like to dispel the
common fears and myths about real estate investments by sharing some of
the major
excuses people give for not getting started.
1) I don’t have enough money
for a down payment.
Today’s mortgage market is amazing. There are lenders out there that will
allow a borrower to buy a primary residence with no money down and investment
property with a minimal down payment. The use of creative financing can supplement
the remaining sum needed for the purchase. The W Realty Group has the knowledge
and experience to help you work with your lender to come up with a creative way
for you to finance your first investment property.
2) I don’t have time to look for investment
property.
This is actually a valid reason preventing some from getting started. Finding
good rental properties takes time and careful analysis. It is a game of numbers.
You may evaluate many, many properties before finding ‘the one’.
After visiting several properties, you might find one that seems to be a great
fit on the surface. However, through careful analysis the projected profits might
turn out to be less than great. That’s where we come in! The W Realty Group
knows where to go to find the good deals that make your numbers work. We can
help you locate the right property, evaluate its potential profitability, and
negotiate a deal that drives you to success.
3) I don’t want to spend my weekends dealing
with
tenants and fixing toilets.
Are you saying you’d rather be spending time with your family & friends
than arguing with difficult people and then cleaning up after them? We don’t
blame you. The W Realty Group believes that everyone should have a strong balance
between business and personal life. That’s why we offer a full range of
property management services to help preserve your investment, while seeking
a maximum return for you. Our philosophy is to carefully evaluate each tenant
to find the best fit for your property. Choosing only good tenants is the first
step in avoiding problems and confrontation. Whether we are your full-time property
managers or just helping you to get started, we can guide you in sorting the
good from the bad.
4) I need to learn more about real estate investing before I can start.
Late night infomercials and expensive courses on real estate investing are giving
the industry a poor reputation. You shouldn’t expect to be sitting on the
beach sipping margaritas while being interviewed about your $5 million net worth
after only one rental property. But after long term, steady growth, you should
expect to build an additional stream of income that allows you to achieve the
dreams and goals of your future. The W Realty Group can help to educate you on
the tools and techniques of investing in residential rental property. You don’t
need to spend big bucks to become an informed investor.
Check out our ‘Recommended
Reading List’ for some
great books to jumpstart
your education.
YOUR HOME IS AN INVESTMENT TOO!
For most people, the equity in their home comprises the greatest
portion of their net worth. Whether you’re buying or selling your home
or rental property, The W Realty Group treats every transaction as an investment
decision. Our process will be aligned with your goals and investment strategies
throughout the sales transaction.
We can assist you in analyzing your future home’s value and negotiate the
best possible price. In past experiences, we’ve transacted purchases at
a price well under the properties appraised value, adding instant equity to the
buyer’s net worth. We can also work with you to determine your home’s
estimated market value based on comparable sales. We’ll price and market
your home to balance your needs for a quick sale and maximum return. Invest in
our experience and let us help you grow your portfolio. For more information
click here for your Free Market
Analysis.
|
|
|
|
 |
|
|
