Real Estate Investing the Right Way
I recently attended a Diversified Real Estate Investors (DIG) meeting in Ft Washington, PA and heard Nick Sidoti, "Dr. Cash Flow", from New York was presenting on Real Estate Investing the Right Way by Increasing Your Cash Flow and Decreasing the Hassles.
If you've never heard Nick Sidoti, you must attend one of his presentations. This self-proclaimed "crazy Italian" doesn't disappoint when it comes to entertaining a crowd and keeping you laughing. And if you aren't laughing or responding to his presentation, watch out for his water gun! It was quite a meeting!
What I liked best about his presentation is his confirmation that my wife and I are doing real estate investing the "right way" by buying and holding properties, aka landlording. Of course, there are many different niches out there for the real estate investor and who is to say that OUR WAY is truly the best way? Let me highlight some points that Nick touched on:
When you buy an investment property, you are buying low (if you are Real Estate Investing the Right Way). Perhaps the property needs work or maybe it is being sold by a motivated seller. These opportunities can create instant equity for the savvy real estate investor. Real estate does appreciate over time, as well. By keeping the property, you can use it as leverage on future purchases.
My wife and I did this with our very first investment property. We bought a vacant, foreclosed duplex, rehabbed it (was approximately $5,000 in repairs/updating), and rented it out for maximum rent. We purchased that property for $115,000 and it was soon valued at over $180,000. We pulled $60,000 in a Home Equity Loan to purchase another property with that money.
2) Passive Income
Just for fun, I googled "passive income" and wikipedia's definition came up first stating that it was "income received on a regular basis, with little effort required to maintain it". That pretty much sums it up! We carefully screen our tenants, they move in and stay for years, and we don't have to do much to maintain this income. We just recently heard from one tenant after 2 years of just getting rent checks! They were having problems with their heat.. a good reason to call! Other than that, we just have to drive to the PO Box every month.
That's right- "Other People's Money". You buy a property for $100,000 and, yes, you make a profit on the rents every month, but guess who's paying the mortgage? Your tenants! So if you have a 15 or 30 years mortgage and keep the property, eventually your tenants will pay off that property for you!
Nick Sidoti's point to rehabbers out there was- if you have a "cash cow" property, why on earth would you sell the cow? Is that Real Estate Investing the Right Way? Maybe or maybe not, but that statement made me realize that my wife and I just need to keep maintaining what we have and make those cows grow!
David Artigliere is a Home Inspector with ARTI Home Inspections LLC. He works with everyone from first-time homebuyers to experienced real estate investors all around the Philadelphia, Pottstown & Reading areas.
Book an Inspection now or call us at 610-220-1907.