Real Estate Investing the Right Way

By
Home Inspector with Reading, Pottstown, Norristown, Philadelphia
http://actvra.in/4wg4

 

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. 

water gun

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:

 

1)  Leverage

tall house

 

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. 

Not bad!

 

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.dollar bill

 

3) OPM 

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!

cow

 

 

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 in Alaska

 

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.

Posted by

david the home inspectorDavid Artigliere, owner of ARTI Home Inspections LLC, is a home inspector in Pottstown, Reading, Norristown, Royersford and surrounding areas. 

He is available 7 days a week and can be reached at 610-220-1907.

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Rainer
9,033
Jason Grams
none - Roseville, CA

Excellent post!  This is exactly how you should invest in property.  I tell my clients the tenants are paying off their future retirement! 

May 03, 2011 10:03 AM #1
Rainer
364,837
J. A. Michail
Real Property Management of Sarasota & Manatee - Sarasota, FL
Real Property Management of Sarasota & M

I think that a key difference that many miss is the difference between "investing" and "speculating -- they are completely different!

May 03, 2011 10:09 AM #2
Rainmaker
306,930
Mike Wong
Keller Williams Realty Southwest - Sugar Land, TX
Realtor: Commercial, Residential, Leasing, Invest

Nice post David. Many "investors" rush into the market without understanding the fundamental rules.

May 03, 2011 10:47 AM #3
Rainmaker
855,255
Kwee Huset
Kwee Huset Realty - Venice, FL
Venice Florida Homes For Sale

Hi David, good post, many investors are looking for ROI - return on investment also.

May 03, 2011 02:07 PM #4
Rainer
127,554
Julissa Jumper
Select Properties of Fayetteville, LLC - Fayetteville, NC
Fayetteville, NC Real Estate

David: Great post! These are all the right reasons people should consider real estate investing in their portfolio. To be honest, though, some of those tenants can be a challenge, and screening for the right ones can make a big difference in the amount of time and money an investment property takes!

Enjoyed reading. Thanks!

May 06, 2011 12:15 AM #5
Rainmaker
95,681
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspect

Thanks for the posts everyone.  

Jason- Definitely!  We consider it our retirement plan.

Saramana- had a lot of speculators (who thought they were investors) fall down hard a few years back.  It reminds me of the tech stocks a decade ago.

Mike- yes!  A lot of "newbies" I meet just want to make the millions overnight and I don't think it's about the quick dollar here.  

Kwee- ROI is definitely important if you want to stay afloat and build your portfolio of properties.

Julissa- Thanks.  Screening tenants has become one of the most important things we do because having an empty house is far better than having a house with bad tenants and we did learn that early on.

May 06, 2011 02:30 AM #6
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Rainmaker
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David Artigliere

ARTI Home Inspections, ASHI Certified Home Inspect
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