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Secrets of Making Money from Real Estate - Part 5
Where to from here: One property is great, but It wont make you very wealthy. Below is the expansionary model of what I think a good real estate portfolio should look like. The Real Estate Investment Pyramid Can be viewd here www.use-your-equity.com/realestateinvesting.htm How this works is simple. Acquire three positive cash flow properties which help support a larger capital gains property. Lets look at the example: Cash flow property 1, worth $80,000 returns $1750 dollars a year with capital growth of 3.5% Cash flow property 2, worth $70,000 returns $1200 dollars a year with capital growth of 4% Cash flow property 3, worth $120,000 returns $2500 dollars a year with capital growth of 2% Capital gains property, worth $250,000 returns -$500 dollars a year with capital growth of 12.5% As you can see the capital gains property looses money. The reason why the model is in a pyramid shape is because the cash flow properties support the capital gains property. Why don't I just by all really high growth properties with cash flow? You can! It's just that finding a property with very high cash flow and a high growth percentage might take more time and could be more harder. Really, there's nothing stopping you but It will generally be easier to find cash flow properties and capital gains properties. So why should I do this? In five years time cash flow property one will be worth $95,000. Cash flow property 2 is worth $85,000. Cash flow property 3 is worth $132,500. The capital gains property is now worth $450,000! The whole investment portfolio is now worth $762,000. If we assume the mortgages on all the properties was 90%, you now have $294,000 of equity you can use! You could sell all the properties and make a nice profit of $294,000 but you'd probably have to pay a capital gains tax of 33% (depends on where you live) not to mention real estate agent fees. Perhaps we could use the profit as a down payment on another property, tax free. 1030 Tax Exchange Example In America a good strategy is that when you make capital gains from a property you should sell it and buy a more valuable property. Normally you would be taxed but not if you use the 1030 tax-deferred exchange. This entails, using the profits of the real estate properties which you sold to reinvest in a more valuable property. So if we look at the previous example, you now have $294,000 which you can use on a deposit for a new property. Lets say you buy a larger rental property with a deposit of $294,000 dollars. If you can get 90% financing you can buy an asset worth $2,940,000! Just imagine how much cash flow you could get from a property worth that much! However, there is little room to "Do it yourself" while using the 1030 tax exchange. The money must be held by a qualified accommodator until you purchase the property. You will have 45 days to draw up a list of potential properties you will buy. You also have 180 days to settle on a property. The properties must also be similar, for example you can sell a bare piece of land and buy a bigger bare piece of land. This is why It's important to talk to an accountant or an attorney before you try this. This article is a general guideline on how to invest in property, residential in specific. If you are seriously considering buying property try to take in some knowledge from this article. Don't stop there though. Because real estate investing can involve so many tax advantages and laws, learn more about real estate investing in your country/state so you can become an expert. This article was written by John Whiteside. The original article can be found here http://www.use-your-equity.com/realestateinvesting.html . Use-Your-Equity can show you how to create value in your home, then show you how to use the newly created equity to make money. http://www.use-your-equity.com for more information.
MORE RESOURCES: L.A.’s Real Estate Upfronts Reveal Penthouse A at Rosewood Residences Beverly Hills Hollywood Reporter Real estate mogul cautions about avoidable mistake when buying a home, explains how to avoid 'drowning' Fox Business Massachusetts real estate transactions for Hampden, Hampshire and Franklin counties May 19, 2024 edition MassLive.com Real estate transfers: May 17, 2024 RiverheadLOCAL Routt County real estate sales at $17.6M for May 9-15 Steamboat Pilot & Today Top AI Tools for Real Estate Agents MarkTechPost London Real Estate Is About to Get the ‘Selling Sunset’ Treatment Hollywood Reporter Mid-May Greenwich Real Estate Market Report Greenwich Sentinel Real Estate Newsletter Articles this Week: Housing Starts Increased to 1.360 million Annual Rate in April Calculated Risk Dodge County Real Estate Transfers Fremont Tribune Should I Buy a House Now or Wait Until 2025? Norada Real Estate Investments The Michael Houck Real Estate Guide for May 19 Oil City News MCB Real Estate Revives Long-Awaited Viva White Oak Mixed-Use Project Source of the Spring Washington state ahead of the game as lawsuit rewrites real estate commission rules - Puget Sound Business Journal The Business Journals Yes, there are other coastal Delaware towns besides Rehoboth Washington Blade Dutchess County, NY real estate 2024: What's on the market for $579K Poughkeepsie Journal Baltimore real estate: 4 waterfront condos for sale The Baltimore Banner STAR resource center Department of Taxation and Finance Home Prices Hit Record Highs in April 2024: Trends & Forecast Norada Real Estate Investments Real Estate Briefs: Lakeside homes, news condos, and more news Rough Draft Atlanta REAL ESTATE | UPDATE | Johnson Bus selling lot for new West Bend Fire Department No. 1 washingtoncountyinsider.com VIDEO | REAL ESTATE | Construction finally underway for Taco John's in West Bend, WI washingtoncountyinsider.com Revolution in real estate: How the NAR settlement is changing the game Eden Prairie Local News James Quinn's Data Center Advisory Expertise at JLL Drives Innovative Real Estate Solutions for Global Corporations Markets Insider Oceanport's Denholtz recognized by commercial real estate organization themonmouthjournaleastern.com Westmoreland County Real Estate Transfers | Real Estate | latrobebulletinnews.com latrobebulletinnews.com Coloradans negotiating lower fees for real estate agents with new law on horizon Colorado Public Radio OT Real Estate Spotlight of the Week: 2115 Sheridan Place The Owensboro Times Innovative Leaders Vanderstraaten and Rohrman Inducted into North Texas Commercial Real Estate Hall of Fame ... dallasinnovates.com Here are recent property transfers up to $1.28 million St. Albans Messenger Real Estate Mogul Grant Cardone Closes Largest All-Cash Multifamily Deal In South Florida This Year Yahoo Finance Robert Willett may be targeting female Realtors in Northeast Ohio Akron Beacon Journal China Says It Will Start Buying Apartments as Housing Slump Worsens The New York Times My Co-op Neighbor Never Pays His Maintenance on Time. Can We Make Him? The New York Times Navigating Northern Virginia Real Estate: An Insight Into Rhonda Campbell's Bespoke Approach Grit Daily Refined Real Estate: Unique Leschi home with lake views lists for $1,395,000 seattlerefined.com Number of homes for sale in Metro Atlanta increased significantly, real estate brokerage says – WABE WABE 90.1 FM Real Estate Transactions for May 18-19 | News, Sports, Jobs Nashua Telegraph What's real estate wellness? Fortune Ellison sues real estate broker Chad Banken over alleged schemes involving contracts for deed Star Tribune Billionaire Frank McCourt raises his hand to buy TikTok Business Insider Connecticut real estate law changed after MV Realty investigation Eyewitness News 3 Connecticut real estate law changed after MV Realty investigation Eyewitness News 3 Sean Bloom Investments Announces $2B Real Estate Project in Las Vegas InvestorsObserver KKR Real Estate Finance Trust Inc. (NYSE:KREF) Given Average Recommendation of “Moderate Buy” by Analysts Defense World Do starter homes still exist? Here's what NJ realtors said NorthJersey.com Edgefront Real Estate Investment Trust (TSE:NXR) Forecasted to Earn FY2024 Earnings of $0.73 Per Share Defense World Berkshire County Real Estate Transactions for April 29-May 3 Berkshire Eagle Local couple buys Pat Burrell's former Center City penthouse for 38% under original asking price The Business Journals Letter: Clarifying changes to real estate industry Morgan Hill Times First Capital Real Estate Investment Trust (TSE:FCR.UN) Share Price Crosses Above Two Hundred Day Moving ... Defense World Home listings are on the rise in southern Colorado, while other indicators show a slowing real estate market Colorado Public Radio Did Fort Worth’s real estate market really ‘bottom out’? | Fort Fort Worth Star-Telegram Southern fast-food chain Cook Out buys Tampa real estate The Business Journals New Rules for North Texas Real Estate Agents Creates Uncertainty Dallas Observer EG Real Estate: 18 Opens This Weekend – East Greenwich News East Greenwich News Busch relative settles squabble with Clayton investors over real estate trust St. Louis Post-Dispatch Artis Real Estate Investment Trust (OTCMKTS:ARESF) Sees Significant Growth in Short Interest Defense World End of war against property speculators marks new phase in China housing South China Morning Post |
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