Real Estate Information Archive

The benefits of real estate investments are well documented. As a tool, few alternative investments compare to the consistency, ROI, cash flow and flexibility presented by common brick and morter. And at no alternative point in history has the real estate investment illustrated such a strong "buy". Interest rates and property values are each at record lows. A nearly perfect scenario exists today! Real estate should become a common thread in each investment strategy pursued--retirement planning, cash flow and growth. It remains a fundamental building block in the creation and preservation of wealth. We've all read the books or watched HGTV. Most of us recognize the techniques and strategies employed by others.  Yet we lack the confidence to take the leap. Most of us can and do appreciate that real estate and business holdings have always remained the two primary components in the creation of wealth. But only a small percentage of the population has or is taking advantage of the incredible opportunities available today. This is a regrettable fact as it is likely that a similar opportunity will never materialize again during our lifetime.

Bearing that in mind, I will continue to identify with and discuss various real estate strategies utilized by myself and our clients over the coming weeks. Strategies that can and will be used as examples to incorporate into your financial strategy for retirement, cash flow and growth strategies--using real estate. And I will illustrate and communicate why there has never been a better time or opportunity than the present:

Timing:

Interest rates are at historic lows. Prices are discounted up to 40%, 50%, 60% or more. As Realtors that work with a lot of investors and first time homebuyers, we continue to negotiate deals that would be unheard of in a traditional market:

Example 1:

An estate sale came on the market in one of the hottest neighborhoods in Albuquerque. Based on recent comps...homes in the area sell for an average of $225,000 with average market time (DOM) of less than 60 days. The house was on the market at $179,900. We made an offer at $152,000 "as-is" within hours of the house hitting the market. Inspections were completed, and bids were acquired to complete any and all potential repairs in addition to a standard remodel (i.e. windows, kitchen, interior doors, carpet, paint, etc...). An itemized repair list was submitted for $38,000. We also included an objection and termination with the repair request. The sellers agreed to the full amount--funding any potential repairs along with the complete remodel. The buyer was, virtually, walking into a completely remodeled house with substantial equity! To recap...the buyer was acquiring a $225,000 house for $152,000...walking into the closing with $73,000 in equity and a complete remodel. The home already had new duct work, a new hot water heater, new furnace and air conditioner. Most of the repairs related to cosmetic changes and the buyer could select her own contractors!

This is only a single example. Dozens more exist that present a similar scenario. There has never been and will never be a better time to make real estate investments. Interest rates will rise. Tax rebates will disapear. Property values will increase and similar opportunities may never be available again!

Cash Flow:

Cash flow strategies include buy-and-hold, wholesale, and/or a number of alternative strategies. In the example, above, had the buyer intended to structure the deal as a wholesale, $10,000 or more could have been realized with little more than her earnest money. Property values have hit a point in which they can be acquired and rented out to realize positive cash flow. There is, perhaps, more opportunity to generate cash flow today than at any previous point in time and countless individuals continue to capitalize on these opportunities. I will expand on cash flow techniques in future blogs.

Retirement:

When structure either of the above strategies and incorporating that strategy into your retirement portfolio, Self-Directed Roth IRA's, IRA LLC and alternative components can be utilized to increase the ROI within your retirement accounts. Growth can and will be realized when properties are acquired at 40, 60 or even 70 cents on the dollar. And cash flow can and will be realized when properties are acquired at a reduced rate, rented out and the earned income is reinvested back into your Self-Directed Roth IRA.

The point is that there has never been and probably never will be a better time to invest in real estate! The opportunities are endless and the potential to maximize your ROI is unrivaled.

If you have questions regarding real estate investment strategies, give us a call. Or continue to look for future blogs.

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.