Investing in real estate can be quite profitable, that's the hook! I believe it is one of the last and BEST opportunities available for a small group or individual to get ahead today. If done correctly, a solid real estate investment will provide the owner monthly cash flow, annual appreciation and tax benefits. I hope this page helps you further consider an investment in real estate. For more detailed information on the subject please call or Email me and I will be glad to further discuss the topic and/or forward additional investment documentation.

Why People Invest in Real Estate

Investing Defined
Whenever an individual places surplus funds in the bank or stock market, or purchases real estate for speculation, he or she has made an investment decision. There is a wide variety of investment vehicles available. Each type of investment has unique characteristics that may be desirable to one investor yet undesirable to another. Investors may even evaluate each investment differently. Each investment may also exhibit different risk levels, and the return or yield on an investment should be commensurate with the amount of risk associated with that investment.

Why People Invest

People invest to obtain the financial independence necessary to achieve their goals. Achieving financial success usually takes time, careful planning, and the assistance of other professionals. Most people invest for the following reasons:

• To generate additional income
• To acquire wealth for their retirement
• To accumulate for their children's education
• To acquire prestige in the community
• To create an estate for their heirs
• To obtain financial independence

Common Investment Vehicles

• Saving accounts and certificates of deposit
• Stocks and mutual funds
• Real estate
• Partnership interests
• Bonds and bond funds
• Mortgages/trust deeds
• Collectibles/art

Why Specialize in Small Rental Properties

Easy to Finance: Financing for up to four units is similar to single-family-home financing.

Fewer Turnovers: Tenants tend to stay longer in smaller apartment complexes.

Easier Entry: Small rental properties cost less to acquire. (Smaller price equals smaller down payment.) First-time investors are often more comfortable investing in small rental properties. Many of your existing and past clients fall into this category.

Better Liquidity: More often than not, smaller, less-expensive investment properties can be sold more quickly than larger investment properties.

Comparing Investments

Let's take a moment to determine the before-tax wealth accumulation potential of three types of investments.

Savings: If we invest $40,000 in a certificate of deposit (CD) at 5%, compounded daily, our investment will grow to $84,675 in fifteen years.

Stocks & Bonds: If we invest $40,000 in a mutual fund growing at 10% annually, our investment will grow to $176,090 in fifteen years.

Real Estate: If we invest $40,000 (20% down) in a $200,000 real estate investment, appreciating at 5% annually, in fifteen years the value of the property will grow from $200,000 to $415,785. Assuming a 15- year fully amortized loan was used to purchase the property, let's take a look at the future net equity potential of this investment.

Future value of property in 15 years $415,785
7% overall cost of sale $29,105
Loan balance $0
= Net proceeds from sale before tax $386,680

Review: In the above examples we determined that if we invested $40,000 for 15 years, we would be able to accumulate wealth (before tax) in the following amounts:
1) Certificate of deposit $84,675
2) Mutual fund $176,090
3) Real estate $386,680

Investment in Real Estate

What Is Investment Real Estate?

Investment real estate is any type of real estate held for investment except an investor's personal residence or second home.
Four Major Advantages of Investment Real Estate

• First Advantage: Income from Cash Flow
• Second Advantage: Equity from Loan Pay-Down
• Third Advantage: Equity from Appreciation
• Fourth Advantage: Tax Savings

Comparison of Investments

Which is the better investment for your client?

Answer: It depends on your client's objectives:

• Need for liquidity
• Risk tolerance
• Yield requirements
• Desire for cash flow vs. equity growth