by Pamela Mauldon
“Land monopoly is not only monopoly, but it is by far the greatest of monopolies; it is a perpetual monopoly, and it is the mother of all other forms of monopoly.”
We get asked questions all the time in regards to how to get started in Real Estate Investing. Some of our clients are interested in picking up a rental or two, some of them want to flip houses, others are just toying with the idea and have questions.
We have put together what we believe are some of the best benefits of Investing in Real Estate.
It is a relatively easy process, and we are happy to answer any questions you might have as to how to get started.
I apologize in advance for my poor writing and grammar skills.
1.The loan (if any) is paid off buy your tenants:
When you buy an investment property for the purpose of renting it out over time, your tenant(s) are essentially paying off your mortgage. If you buy in the right price range, your rental fees should cover the mortgage payment, annual taxes, and the homeowners insurance. This means that if you take out a 15-30 year mortgage (or whatever you choose) as long as it is rented out, someone else is paying off that mortgage, interest and all! While this might not equal a big chunk of change in your pocket every month, it does mean that once the house is paid off, should you choose to sell, you have made a very nice profit. This leads to the next benefit!
2. Property Appreciation/Inflation:
As your rental property is lived in over the years and someone else is paying your mortgage, your property is also likely steadily increasing in value over time. Of course values can fluctuate over time, however historically speaking, values have trended upwards throughout the course of history. Currently, interest rates are low, which may or may not continue, and inventory is low too. This means that more people will be turning to renting as it becomes less and less affordable to buy a home.
3. You can pass it down to your children or other loved ones:
Do you ever think back about your grandparents home, or house that you grew up in and wish it would have stayed in your family? I DO!! Both sets of my grandparents had homes in what would be some pretty awesome neighborhoods today. I wouldn't actually be able to afford either house now, so just imagine how happy I would have been to inherit them free and clear lol!! Back when they were purchased, they paid a shockingly low amount...like what a car costs today! See #2 above!
When we think of what we want to leave to our son and future children, Real Estate is the first thing that comes to mind.
4. Low Supply and High Demand:
I've already briefly touched on this however it needs more explanation. I first have to say that I don't have a crystal ball and yes of course things can change...but at the moment, there are scores and scores of people relocating to Texas. Thats awesome, but it also means that there are more buyers than sellers in some areas. Where do these people go??? They rent.
5. Tax Benefits:
I’m no pro here in regards to the lingo but i've included some articles that can explain it way better than I ever could :)
6. Potential for immediate Cash Flow:
Most of the time you might not make a huge monthly profit...but if you are willing to buy something that might be a little ugly, and put in a small amount of elbow grease, you can turn an ugly duckling in a nice neighborhood into profitable investment. It is instances like this where you are most likely to walk into instant equity!
7. Long Term Financial Security: See all of the above.
8. Getting Financing is relatively easy:
If you don't happen to have the funds to buy a property all cash, investment loans are pretty easy to get.
You can do a traditional investment loan which normally requires 20% down, or you can look to private banks such as Jefferson Bank or something similar to take advantage of their Portfolio Loans.
We hope this is helpful, and look forward to answering any other questions you might have!
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” Franklin D. Roosevelt
“This is a real-estate-driven economy from top to bottom.” Christopher Thornberg
“If you don’t own a home, buy one. If you own a home, buy another one. If you own two homes, buy a third. And, lend your relatives the money to buy a home.” John Paulson, investor and multi-billionaire
“Owning a home is a keystone of wealth… both financial affluence and emotional security”. Suze Orman