Tucson, Arizona Real Estate: Investor's Corner, Learn it, Know it, Use it

Not everyone I'm serving right now has to buy a house, but they want to because they know just how great of a SALE that's going on in the Real Estate market. For the investor, their objective is to accomplish the greatest amount of cash flow  and equity possible.  And in order to do this, they must buy below market value and know competitive rental rates to see how much cash flow will be created if they plan on using the home as a rental. Some investors are buying now, only to turn around and sell after they perform a facelift on the home. This article however, will focus on the investor who's intention is to use the property as a rental. 

What strategy do real estate investors use to profit from owning a second or third home? Checkout the example below for more details on how this works. For starters, remember that a smart investor will only buy a home, townhouse, or condo if he/she can purchase it for at least 15-20% below market value.

In this case say that you're buying a home worth $125,000 for $95,000. 

Here's the breakdown of your expenses and income

20% down payment on $95,000 means you'll finance $76,000.

Your mortgage payment at 7.5% interest will be $531 per month plus taxes and insurance. Which would be approximately $135 per month for a home of this value. That equals $666 per month. In addition, the average maintenance cost for a home is $50 per month or $600 per year. Combining those two figures equals $716 per month.

This property will rent for $900 per month, Putting $184 in your pocket monthly or $2200 per year. That's a 11.6% return on your initial investment of $19000. And that's not all!

Here's the kicker: 1) Any and all mortgage interest paid is tax deductible even if someone else is paying it for you. 2) All repair expenses for the property are  tax deductible, 3) And last but certainly not least, you have $30,000 of equity because you bought this home for 95,000 and it's market value is $125,000.

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The article provided above was written by Kevin Wood of Realty Executives. Kevin can be reached via email at Kwood@gotucson.com , HomesInfoTucson.com or 520.260.3123. Kevin has helped people move in and out of Tucson for nearly 4 years. In his previous career he represented Honda Automobile Corporation for 10 years and was in the top 5% of all sales consultants nationwide.  Kevin's office is conveniently located on Kolb Road just south of Tanque Verde.