The daunting task of finding investment property fitting your financial criteria can sometimes be overwhelming.
Before venturing very far, investors need to know what they want to get out of the investment. Is monthly cash flow the objective or would a handsome appreciation be more appealing?
Like the sound of a 15 year retirement plan? Buy a property with a break even cash flow on a 15 year note and BINGO! 15 years from now you get to keep that principal and interest payment you've grown used to making. This strategy works great for a college savings plan for those with young children. Even better as a retirement plan.
Retire on Easy Street!
Buy a property every year for 15 years. On the 16th year, take out a new mortgage on the newly paid off property for 75% of the value. That money is yours and even better: tax free because it's not income. It's your equity! If your properties are all worth $100,000 you can tap $70,000 - $75,000 every year because each year you have a property that becomes free and clear. And you don't have to pay any income taxes on it. (Try doing that with $1.5M of stocks!). And believe it or not, it gets better. This retirement income stream is protected by inflation because it is all based on the value of your real estate which automatically adjusts based on inflation.
Not patient enough to wait 15 years for the reward? Buy an undervalued property, improve it, (along with the rents, of course) and then sell it. By increasing the net operating income on the property, you exponentially increase its market value.
Improve a 4 plex enough to justify raising the rent from $500 to $600 / month and WHAM! Your property's value jumps from $300,000 to $360,000 (based on a 8% cap rate)
Interested in finding out how you can take advantage of real estate's benefits? Contact me via email at todd.graves@cbshome.com or call me at 402-880-3478.
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