“It's tangible, it's solid, it's beautiful. It's artistic, from my standpoint, and I just love real estate.” Donald Trump
For the majority of people, real estate is the single best tool for wealth building. For the average person, real estate may be the only vehicle to carry him or her to retirement wealth. I bet you’ve heard that 75 percent of millionaires made their money through real estate. Why is that? Why is real estate so lucrative and profitable? Because only Real Estate can provide the following benefits:
Cash Flow, Leverage, Appreciation, Tax Benefits,Equity Buildup
In this initial letter we’ll cover Cash Flow, Appreciation, & most importantly, Leverage. To the Real Estate investor Leverage is a secret unknown to the public. Most people never realize or understand the incredible wealth building power of LEVERAGE!
When people buy a home they typically put a 3-20% down payment on the home, and the bank finances the rest. For example, if you purchase a home for $100,000 you may put $20,000 down. Do you see the power of leverage already? You spent $20,000 and received $100,000 worth of property! I don’t know about you but I’m used to paying full price for things. Let’s expand and include property Appreciation. The current appreciation rate of Idaho Falls properties is about 5 percent a year. Five percent of $100,000 is $5000. Let’s look at the numbers a little more closely:
$20,000 invested
$100,000 property x5 percent appreciation yearly = $5000
$5000 / $20,000
= 25 percent return on your money invested!!!
WOW! Tell me, does your mutual fund offer that? Does your IRA? How about your bank? There is NO better way to invest your money than to invest in Real Estate. Do you fully understand? You just earned 5 percent on $100,000! Remember, you only invested $20,000! Your rate of return in Real Estate is outstanding!
Let’s take this to the next step and I’ll show you how you can maximize your gain even more.
We’ll take the same $100,000 property. The market value of the property is $100,000 and as a Realtor who specializes in investment properties my job is to find you a deal. So we actually purchase the property for $90,000, when market value is $100,000. (I know you can already sense the magnitude of your return). Now let’s say you rent the home out for one year. You get a great mortgage (because I know great mortgage brokers). On a $90,000 loan your monthly payment will roughly be $600.00 per month. You then rent the home out for $800.00 per month, which is a total Cash Flow of $200.00 per month. Now that we’ve changed just these two variables lets examine the investment numbers below after just one year of owning the home.
Market Value of Home = $100,000
Purchase price = $90,000
Money you invested = $20,000
Cash flow $200x12 months = $2400
5 percent appreciation on $100,000 = $5000
Current Value of the property = $105,000 + $2400 positive Cash Flow = $107,400
Purchase price was $90,000 !
A Total Net Gain of = $17,400
That’s a 87% return on your $20,000 investment after only one year! In rapid growing Eastern Idaho we can duplicate this year after year. This is a basic example of real estate investing and there are numerous ways we could continue to maximize your return.
Now I realize that many of you are thinking, “How do I come up with $20,000 for the down payment?” Here is your answer, “Do you currently own your home?” Do you have any equity in your home? If so, we can easily use the equity in your home to invest. It’s called a Home Equity Line of Credit aka HELOC.
Ok, but what if you have no equity or no home? Well, how’s your credit? Do you have good credit but no equity and no cash? If so, we can use your credit to invest! Not confident in your credit either? I’ve helped many people buy homes with a zero down payment and mediocre credit. If you want to invest in real estate because you see the HUGE advantages then BELIEVE ME I CAN MAKE IT WORK, I WILL MAKE IT WORK!
If you have equity in your home, good credit or simply the desire to invest in Real Estate, I can help you create the future you long for. If you ever have any questions or comments please call because I want to help!
“Owning a home is a keystone of wealth, both financial affluence and emotional security.” Suze Orman <!--[endif]-->
For Anything Real Estate,
Christopher McBride
* I highly recommend Investing in Real Estate by Andrew McClean & Gary W. Eldred, PH.D. This book is the most comprehensive and easy to understand book on the market. It is an absolute must have for anyone interested in Real Estate Investing.
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