Where is the Stock Market Going?

Stocks were poised to fall again Friday as an investor funk continued after the Dow Jones industrial average hit a six-year low.

On the other hand, the cash flow in rental real estate continues to be strong. As real estate values have dropped, our cash flow from rentals has increased. In many areas of the country we are looking at properties for $30K – $40k that rent for $700 +/-. So when we hear news of the stock market falling I just smile and buy more properties.

OFHEO Top Performing Markets

 

For the full report go to ofheo.gov and open thier pdf report.

Join us on Biggerpockets

I have been a fan of Biggerpockets.com for a few years now.  This is a priceless resource for experienced real estate investors and newbies alike.  I have recently started a group on the site and would like to invite you to join us.  http://www.biggerpockets.com/groups/148

In this group we will be discussing markets, strategies and networking opportunities so come by and check us out.

How Is Your Cash Flow?

We are focusing on three primary strategies today. 

1. Rehabbing and selling turn-key rental properties
2. Wholesaling
3. Building our portfolio of long term cash flow rentals

Both the rehabbing and wholesaling strategies are cash based strategies…this is our business and how we make most of our revenue.    However, as we all know, you make cash and spend cash, once the deal is done it is done and we need to go hunt for the next opportunity.   Cash Flow is how we are building a long term income stream to support our retirement, as well as a significant aspect of our tax strategy.

Above is an actual Duplex we own in Ohio.  As you can see the cash on cash return is 16.93%, and will be over 20% in year 5.  This is after we have factored in maintenance, vacancy, utilities, move out repairs, etc…  The even better news is that this property depreciates according to the IRS, which give us a tax benefit.  The property value is $70,000, lets assume that the land value is $10,000 (the land does not depreciate) so we depreciate $60,000 over 27.5 years, so we reduce our taxable income by $2,182.  Effectively the rental income I receive is almost tax free.

Of course I have painted a fairly pretty picture here, and the reality of owning rental property is not with out challenges, which is why continually advocate education, mentorships, and partnerships for new investors.  One way you can continue your education is to register for our free calls and webinars listed on our events page.

Fannie Mae Lifts 4 Property Rule

Investors Can Now Finance Up to 10 Investment Properties Starting March 1, 2009! Lending giant Fannie Mae announced on Friday, February 6th 2009 they’re lifting the 4 property rule limit as of March 1, 2009. The Fannie Mae Policy Change will allow qualified investors to finance more than 4 properties. This is a huge policy change that will make a massive positive changes in the real estate market across the country. Under the previous guideline investors could only finance 4 properties, which meant a seasoned investor with 5 properties, great credit and documented income could not finance an investment property. Well today that has changed. Here are the requirements for investors under this new guideline: Although the LTV is only 70% this is still a huge stride in the right direction allowing investors to capitalize on this market.

Property-flipping rule suspended.

The White House temporarily suspends a rule that imposes a 90-day waiting period before foreclosed homes can be sold to receive government loans.(this doesn’t really apply to my investors who are buying for cash-flow purposes, however, it does help those investors who are selling to homeowners.)

http://www.dealmakersblog.com/fannie-mae-lifts-4-property-rule-limit/

Virtual Investing Still Needs A Team

I am a fan of  investing in Real Estate Markets that have solid demographics and cash flow.  So sufficet to say that much of the investing I do is thousands of miles away for where I live.   Our sister company, The Real Training Insittute has been advocating this approach for years.

However, I have seen an alarming trend growing in the world of “virtual investing”.   With the sophistication of the internet it is easy and simple to purchase very low cost properties across the country.   The problem with this is not with the properties or the market, but in the due diligence and team building that buyers do prior to purchasing a property.

Owning Out of State Real Estate can have many advantages…Price, Cash Flow, etc…  But one of the main disadvantages is that you cant just drive over to the property to fix the toilet, or collect the rent.   So prior to purchasing a property we advocate building a support team first.

Your Support Team

1. Property Management Companies (you should have at least two)
2. Handyman
3. Contractors
4. Insurance Agents
5. Local Lawyer
6. Inspectors

Setting up this team takes a little work on the front end, but will save a lot of head aches on the back end.  In addition this team can give you advice as to the property you are evaluating, the neihboorhood, the price, the repair costs, and after repair value.

Updated Events and Calls for February

We have updated our webinar and call schedule for February so please go to our Events page for the registration links.  We have a lot of great content and experts featured this month so mark your calendars!

Events and Calls