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Real Estate Information |
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Finance Your Real Estate Investment Properties
Unlike traditional residential real estate mortgages, real estate investment financing is way more creative and offers more options than you think. The golden rule in real estate investment is OPM (Other People's Money). I have enough money; shouldn't I buy my real estate investment for cash? No, I absolutely advice against investing large sums of cash into a single real estate investment. There are two reasons why not. First, you give away most of your profits by not leveraging your real estate investment. Second, it is far too risky to put every egg into one basket. Let me explain the leverage issue for a moment. I will give you an example of a $100,000 investment property that typically increases its value (appreciates) by 7% average a year. Maybe more, maybe less depending where you live. Paying all cash for this property will yield in a 7% appreciation profit plus the net profit from renting the place. Now you're looking at roughly 15% of returns. If you're conservative with your investments you might be satisfied with this kind of a return. These days you might get equal or better returns with other conservative investments minus the hassle of being a landlord. But you don't mind being a landlord, because you understand and utilize the leveraging method with financing your real estate investment. With the example above you will make roughly $15,000 a year in profits from your investment. Now let's take a closer look at what leveraging can do for you. Today a typical real estate investor can get financing as high as 95% - 97% of the purchase price. Occasionally 100% financing is available as well. But this would be totally unfair in this example to compare this with all cash purchasing. 15% return sounds like a lot, but wait till you see this. Let's assume that the rental income will cover all your expenses including the mortgage payments. Taking the same example from before your net return would be the 7% appreciation profits of your property. This would translate into a $7,000 a year profit. With a 95% financing in place you would get $7,000 return on $5,000 (your 5% down payment) invested. This is a whopping 140% return on investment. With the same $100,000 you can go out there and get 20 investment properties, finance 95% of it and make an amazing $140,000 profit a year. This beats the projected $15,000 profits with an all cash transaction any day. Of course you will have a lot of trouble to get financing for 20 properties in a single year. Typically 5-6 new rental property mortgages are the maximum lenders will allow these days. This is the signal to get creative with your financing structures. In this case sellers financing would be your key to achieve your goal of maximum leverage of your investment dollars. Despite the message from all these late night infomercials, seller financing is harder to get than they want you to make believe it is. It all depends on the seller's ability to offer seller financing and the seller's motivation. Only about 1 out of 20 properties for sale are able to get seller financing. That means that there's no mortgage balance on the property. From this narrow selection the seller must be motivated to sell under these conditions. This could be tax reasons, time constraints, personal reasons and many more. As you can see this translates into a lot of work to achieve your goals. But let me tell you one thing. This separates the tire kicker real estate investors from the real go-getters. Wouldn't you agree that a little bit of hard work and determination is well worth it to build a real estate empire? I think it is well worth the trouble and hard work. At the end of the day you keep building your real estate investment portfolio and sooner than later you will be able to cash in. Sincerely, Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner.Learn more about real estate investments at http://www.suncoastrenttoown.com or send a blank email to mailto:suncoastrenttoown@getresponse.com
MORE RESOURCES: Russian Demand for U.S. Real Estate Surges 78.5% The Moscow Times What renters really want | Real Estate Newsletter Inquirer.com NYC Real-Estate Execs Throw Money Behind Adams to Counter Rise of Mamdani The Wall Street Journal WA real estate firm fired woman for reporting harassment, lawsuit says The Seattle Times Livvy Dunne Tried to Buy Babe Ruth’s Former Apartment. An N.Y.C. Co-op Board Said ‘No’. The New York Times Commercial real estate update: As big box brands buckle, the three A's can save the day Tallahassee Democrat Real estate investors are purchasing more U.S. homes as high prices lock out would-be buyers CBS News Fond du Lac County property sold for $700K in real estate transfers for June 30-July 3 fdlreporter.com Luxury Real Estate Company Unveils ‘Flathead Lake Club’ Proposal in Lakeside at First Public Hearing Flathead Beacon Banner Real Estate Group breaks ground on The Faywell multifamily community in downtown Wheaton Chicago Agent Magazine ‘It’s all looking great’ for the M’s of M2 Property Group in Texas Real Estate News by RealEstateNews.com ‘Ongoing stagnation’: Real estate fundraising stays muted in H1 Private Equity Real Estate | PERE Delaware journalist goes beyond real estate data to tell stories about affordable housing Yahoo News DDN: Judgment filed in Wright State’s real estate arm case Wright State University News of public record: Coshocton County real estate transfers Coshocton Tribune Milestone Real Estate owner realizes dream with Downtown Fresno office thebusinessjournal.com The Link Between U.S. Immigration Changes and Real Estate Opportunities in the Philippines Asian Journal News SDCERS to lift infrastructure allocation as it trims real estate IPE Real Assets Lancaster County hits new real estate record LancasterOnline Top Manitowoc real estate sale was $2.2 million for week of June 30-July 2 Herald Times Reporter Staten Island real estate 2025: Housing inventory plummets as prices climb, report says - SILive.com Berkshire region real estate sales – July 11, 2025 The Berkshire Edge Hybrid ‘buyer agent’ blends AI with the human touch Real Estate News by RealEstateNews.com Lee & James Real Estate Photography Launches Back-to-School Special for Portland Area Realtors Akron Beacon Journal Amazon has profoundly changed Polk's industrial market The Business Journals Real Estate: June 2025 Coronado Market Update Coronado Times A tale of two Floridas: Real estate industry torn over DeSantis' push to eliminate property taxes Fox Business ARX Launches First PPE Brand Designed Specifically for Women, Redefining Safety on the Jobsite Boston Real Estate Times Current Real Estate Roundup - July 10, 2025 Nantucket Current Fort Greene rental building trades for nearly $210 million Crain's New York Business Guest view: The renaissance of necessity retail real estate IPE Real Assets Video tour of a waterfront Jupiter Island estate that sold in June for $18 million Treasure Coast News As Sovereign Debt Loses Its Luster, Economist Sees Investors Turning to Real Estate and Other Hard Assets Urban Land Magazine $400 Million Family Lawsuit Involving Prominent Fullerton Real Estate Figures Part 2 Fullerton Observer Signs of Recovery: Boston Lab Market Shows Momentum in Q2: JLL Report Boston Real Estate Times What's the most expensive property sold in Rhode Island? July 11 real estate transactions The Providence Journal Is private real estate underestimating risk for US life sciences? Private Equity Real Estate | PERE Department of Taxation and Finance dos.ny.gov Real Estate Roundup: YKK Sells Anaheim Building for $39 Million Orange County Business Journal Real Estate Minute – 07-10-2025 Texomashomepage.com Mom, I’m Going Into Real Estate The Jewish Link Leading Index for Commercial Real Estate Increased 7% in June Calculated Risk Providence Hill Real Estate owners buy office building near Tuckahoe HQ Richmond BizSense Real estate boss targeted in San Francisco with smear campaign The San Francisco Standard CNBC is expanding its real estate coverage Talking Biz News As Californians Fought Corporate Landlords, YIMBY Action Partied with Big Real Estate’s Cash CityWatch LA How Egypt's Capital is Becoming the Epicenter of Real Estate Transformation in the Region Entrepreneur Report: Leasing lags, but Dayton bets big on defense and development The Business Journals Real estate CEO warns of growing ‘exodus’ as people have ‘given up’ on California — but where are they going? Yahoo Finance Apartment investor closes second funding round at $373 million The Business Journals Where are home prices falling most in America? This SWFL community made top of the list Naples Daily News Fetner, MCB Real Estate, Farallon Capital Buy 240 Willoughby Street for $210M Commercial Observer Confusing housing stats & real estate nerds Sacramento Appraisal Blog |
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