Investing In Todays Real Estate Market
INVESTING IN TODAYS REAL ESTATE market has entry level investors scared. Equity Scout has the Five Approaches: rebalance, lift & shift, speculate, bargain hunt value, and hold. After years of experience I recommend value bargain hunting, and hold options.
If you happen to be a deep pocket regional investor with 150 apartment units, hotel, office building or the like Lift and Shift makes sense. But then it does in any market as regional opportunities vary. Rebalancing rarely makes sense as any investor’s calculators will reveal. Investors can speculate in any market.
If it is probable the prospective investment will return cash income far into the future it is really hard to go wrong. Rental income values can be readily calculated.
McMurdie’s Real Estate Rule No. 14: Never, ever count on price/value increases. Never assume in any fashion, or use a computer program that does not have a zero entry value for future appreciation. If you get it, that great. If you doubt this formula, look at the market now. If you used 00 as future price appreciation when you purchase the current market has 00, zero, effect. Just go to the bank and deposit your money.
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There is no other investment where one can put 20% to 30% down and someone else (the tenants) pay off the investment. There is no other investment that has such excellent long term tax advantages. Even if the property NEVER appreciates (long term ownership has never seen depreciation unless the property has had major deferred maintenance)….again, even with “0″ appreciation, the investment in rental real estate can be very beneficial. Can’t manage property? There are property managers. Can’t do the accounting? There are accountants. In my real estate career, I made a lot of money for my investment buyers. And needless to say, I also have rental properties.
If the income property is paid off before retirement…it is an excellent cash flow!
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