Buying Single Family Homes–Short Term Profit & Long Term Wealth

A Steady Method to Increase Long Term Wealth

You won’t get rich quick buying single family homes for profit but you will get rich. It is just a matter of time. There is an old saying about planting trees. “The best time to plant a tree is 20 years ago and today.” The same holds true for buying houses. Buy one or more this year and you will be VERY glad you did in the future. Let’s see why.

 

Why Single Family Hoes Are a Sound Investment

Every investment must be considered not only for its rate of return capabilities, but its long-term viability as it relates to the owner’s personality, talents, capital ability and management expertise. While it is true that the owner can hire out the management of his real estate investment properties and avoid the day-to-day headaches, his best return will result from self-management. It has been said that if you hire out management of your real estate investments, you should be prepared to lose 30% of your cash flow. First, you will lose 10% to the management fee. Second, you will lose 10% to mismanagement because no one will look after your property like you will! Third you’ll lose 10% to theft.

So, what is the ideal investment vehicle to own long-term, self manage, and has its value determined by emotion, not gross rent multipliers, net operating income, or internal rates of return?

Single family homes are the IDEAL investment because they provide:

  1. Income from rents.
  2. Depreciation, paper write offs to save you money on your taxes.
  3. Equity, your tenants pay your loan off for you.
  4. Appreciation, the average house in America has increased in value over 6% per year for the last 30 years!
  5. Leverage, unlike stocks you can buy houses with very little of your own money.

Here are some more reasons why you should buy Single Family Homes for profit:

  1. You buy & sell houses from owners NOT investors.
  1. SFH’s appreciate faster & more consistently than standard investments-demand and emotion drive prices up, not rental income.
  1. SFH’s are easier to sell,when you need cash & finance or refinance.
  1. If you make a mistake-it’s not as devastating as if you had bought a million $ apartment building.
  1. Safety of investment—SFH’s spread risk, unlike apartments.
  1. You can exchange tax free unlike stocks that you pay capital gains on before reinvesting your proceeds.
  1. The principle of converting ordinary income into capital gains.

 

If you take ordinary income that has been sheltered from taxes with depreciation, then subsequently sell the property you will pay capital gains-as low as 8%– not ordinary income tax rates. You can become rich learning how not to pay taxes over your lifetime and investing the savings in SFH’s

  1. Ease of management, would you rather manage 100 SFH’s or 100 apartment units?
  1. Note; you don’t have to start investing at a young age to make money in SFH’s. No matter what your age you can begin making profits from SFH’s immediately. Buying houses “right” will produce immediate results and long term security for you and your family.

Give us a call at California Private Money Lenders to see how we can help you navigate the Single Family Home investment model at 707-315-1119. Or fill our our borrow form or contact form and one of our private money lending professionals will be in touch promptly to answer your questions.

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8 Things to Consider When Buying an Investment Property

How to Conquer Investment Property Investing

For most people, buying real estate represents a major investment. In exchange for committing large sums of money, you should be able to receive an excellent return over time on your money. On the other hand, if you make the wrong investment, you stand to lose a great deal of money. Here are eight tips to help your investment perform well.

  1. Acquisition Cost

Are you buying this investment property at the right price? While good investment properties are rarely cheap, if you are unable to find comparable sales that support your price, you might be overpaying.

  1. Availability of Financing

Can you get a reasonable loan on the property? If you cannot, ask yourself this question… If my lender does not want to make a loan on it, do I really want to own it?

  1. Management Needs

Some real estate, like single family homes in highly desirable communities, is very easy to own. Others, like apartments in rougher parts of town, require a great deal of management. Does the property match your management abilities? If not, do you have a good third-party manager that can help you?

  1. Potential Tenancy Issues

Are the building’s tenants stable? A full building with a great deal of tenant rollover in the next couple of years could very quickly become an empty building. If you do not have extensive experience with re-tenanting investment properties, seek out buildings with stable tenant rosters.

  1. Physical Condition

Physical repairs do not always add significant value to commercial real estate. As such, if you do not have a clear strategy that involves doing rehab work, look for properties which are likely to remain in serviceable condition for as long as possible.

  1. Location

A poorly located property can be profitable at the right price. Even so, you should look carefully at a property’s location to see if it will cause trouble in retaining existing tenants or in finding in new tenants in the future. Be especially wary of changes to the area which could impact competition or limit access to the property.

  1. Future Competition

The only retail center in a town is a great investment until three more retail centers get built. Survey the surrounding area to see the likelihood of new competition coming in. If construction is coming, ensure that there is enough demand to absorb the new buildings without harming yours.

  1. Exit Strategy

Investment properties usually get sold some day. Does the building that you are considering have a clear way that you can make money when selling it? Exit strategy is an especially important concern with buildings that could lose tenants over time.

 

Given the significant cost of a piece of investment real estate, maximizing your investment potential while minimizing your risk is crucial. Following these tips is a great first step and then calling us at California Private Money Lenders, 707-315-1119 or fill out borrower form or contact form and one of our hard money specialists will be in touch promptly to answer your questions. .

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