For our current market in Hampton Roads, Virginia, there is an abundance of great properties for sale. If you’ve ever thought about investing or are currently investing in real estate, this is the time for you to make your money. With the large surplus of available properties, investors are negotiating great deals on great producing property.
This is the time to buy a property, rent it, and hold it for the next 5 to 10 years, preferably. You have experienced the market correction and real estate here locally is between 3-5% less than it was a year or two ago. Not only that, but there is a great cushioning affect with seller contributions and negotiations on price. I have noticed some great rental units with excellent prices, and they would be great to pick up, rent out, and sit on the cash flow.
I think the mulit-family properties are the way to go for long term investments. Primarily because of the cash flow. If you were to pick up a 3 or 4 unit building at a reduced price, and rent them for market rent, and hold it. You would make more cash flow and as each year goes by, you will make even more. The main differences between single family and multi family is that you only have one tenantin a single family, and if they don’t pay rent, your out 100% of your rental income, whereas, with a 4 unit, you would only be out 25% of your rental income. Also, with yearly rental increase, your cash flow will be exponentially more with multi-family because if you increase $25 a unit, that’s only $25 for a single family per month more, whereas a 4 unit once again, that would be $100 per month more for each year. That’s add up!
Once the market begins to shift back within the next year or so, those that took advantage of this market will reap the benefits. Properties will begin to appreciate again and the reduced price you received will be realized as instant equity and gain.
It costs more to invest in this market, but for those that know the old saying, it takes money to make money, holds true. Check out my site for further investing information.
Showing posts with label Real Estate Investing. Show all posts
Showing posts with label Real Estate Investing. Show all posts
Tuesday, November 11, 2008
Investing In Real Estate without the Large Downpayment
In our current financial market, it has become increasingly more difficult for the average real estate investor to purchase an investment property due to the large downpayment requirements, especially with multi-family property.
There are a couple of ways to get around the large downpayment requirements coming out of your pocket. The old philosophy of OPM, or using Other People’s Money, still holds true, why not leverage yourself to do more? Just be certain that if you plan to leverage yourself and “borrow” the money, have a strategy in place to payback what you have borrowed, the easiest way is from the newly acquired property.
The most common way to leverage is to secure a line of crediton one of your existing properties, whether it’s investment property or your home that you live in. You can “borrow” the downpayment from one home to put into another. Keep in mind, that your downpayment reduces the loan amount, so taking from one property to another is not money wasted, but essentially moving money from one home to another. It’s a great way to acquire a new property with money sitting in your current home.
You can also “borrow” the money from some alternative sources such as your IRA. Using your IRA, you can use some of your retirement money to further your investing and once again, just pay yourself back over time. If you plan to invest long term, there is no better way to ensure a more healthier retirement than from a property paid off completely and the rental income generating from it directly in your pocket monthly.
There are other ways to get the money as well, you can look into your stocks, mutual fundsand even life insurance policies. You may want to speak with your financial advisor/planner to get the specifics, but once again, a great way to leverage yourself for long term wealth.
The last item to mention is very basic. You can sell an existing property to acquire a new one. For long term investing, not always the best strategy, but if the newer property is significantly superior, then may be worth entertaining. The draw back to this is if you sell an investment property for another investment property, you can get taxed Capital Gains of 15% on the net proceeds. That is of course, unless you utilize the 1031 Tax Free Exchange. Taking your proceeds from one property to the next without physically taking control of the funds will constitute the tax free exchange. For more details on 1031 Exchanges, visit my site at JoshSellsVirginia.com.
I hope this topic is helpful to many of the investors out there that are frustrated because of all the good deals to be had but not having the money needed to get into the game.
There are a couple of ways to get around the large downpayment requirements coming out of your pocket. The old philosophy of OPM, or using Other People’s Money, still holds true, why not leverage yourself to do more? Just be certain that if you plan to leverage yourself and “borrow” the money, have a strategy in place to payback what you have borrowed, the easiest way is from the newly acquired property.
The most common way to leverage is to secure a line of crediton one of your existing properties, whether it’s investment property or your home that you live in. You can “borrow” the downpayment from one home to put into another. Keep in mind, that your downpayment reduces the loan amount, so taking from one property to another is not money wasted, but essentially moving money from one home to another. It’s a great way to acquire a new property with money sitting in your current home.
You can also “borrow” the money from some alternative sources such as your IRA. Using your IRA, you can use some of your retirement money to further your investing and once again, just pay yourself back over time. If you plan to invest long term, there is no better way to ensure a more healthier retirement than from a property paid off completely and the rental income generating from it directly in your pocket monthly.
There are other ways to get the money as well, you can look into your stocks, mutual fundsand even life insurance policies. You may want to speak with your financial advisor/planner to get the specifics, but once again, a great way to leverage yourself for long term wealth.
The last item to mention is very basic. You can sell an existing property to acquire a new one. For long term investing, not always the best strategy, but if the newer property is significantly superior, then may be worth entertaining. The draw back to this is if you sell an investment property for another investment property, you can get taxed Capital Gains of 15% on the net proceeds. That is of course, unless you utilize the 1031 Tax Free Exchange. Taking your proceeds from one property to the next without physically taking control of the funds will constitute the tax free exchange. For more details on 1031 Exchanges, visit my site at JoshSellsVirginia.com.
I hope this topic is helpful to many of the investors out there that are frustrated because of all the good deals to be had but not having the money needed to get into the game.
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