" With interest rates at their historical lows
and real estate value depreciation in the last 2 years,
now is a good time to invest. "
The common thing we hear when people talk about investing in real estate or rentals is that they need to deal with maintenance issues and tenant headaches. Careful planning, having a good system in place, and working with a "team" are the keys to successful real estate investing. It takes a good amount of time and experience to learn how to manage properties.
(Note: For those who want to invest in real estate but simply cannot because they have a full-time job or have no time to learn how to manage rentals, we have options we can offer through our "Virtual Rental Property" program in the Alternative Investments section of this website. This program enables investors to have passive income and/or increase wealth without the negatives of having to manage a rental property.)
So why invest in real estate?
The main idea of real estate investing lies in the principle of leveraging. Imagine putting down 10% of the purchase price for a rental property and borrowing the rest by getting a mortgage. Assuming the investor selects the type of property that brings in greater monthly rental amount than what he pays for his mortgage, utilities and property taxes (i.e. positive cash-flow property) he/she case can make money 3 ways: (1) Positive monthly cash-flow (from rents less the expenses), (2) Monthly principal pay-down from mortgage payment, and (3) property value appreciation. Because the borrower invested only 10% of the value and borrowed the rest, he/she has made more return on his/her investment than if he/she put down 100% of the purchase price. The mortgage helped leverage the investment to increase its returns or profit to the investor.
Many financing options are available for individuals who want to get involve in real estate investing. Different lenders have different lending guidelines. In order for us to help you, we need to understand your short and long term goals, plans for "exit strategy" or when you intend to sell, and other pertinent facts about yourself and the property you want to invest in. Being investors ourselves, we might also be able to help suggest a few creative solutions to your property management issues and other ways of getting the financing you need.
Please note, many lenders will offer residential mortgages usually for only up to 4 units in each rental property. Side-by-side duplexes, triplexes and four-unit apartments or rentals are considered residential. Anything beyond 4 units usually has to be approved for commercial mortgages. Please check out the Commercial Properties section of our site.
Whether you are fully- or self-employed, first-time or seasoned investor, we have different programs to offer. If you already own rental properties, most lenders do what is called the rental offset. This simply means they add a percentage (usually 80%) of the rents you get from your properties to your income. Some with calculate what we call a Debt-Coverage Ratio (DCR) for all your properties to see if you can qualify to purchase your next property. Simply put, if you divide the annual income by all the expenses in all your properties, the ratio should be equal to or greater than 1.1 DCR. If it sounds complicated, don't worry, part of our job is also to sit down and analyze this number for you.
So call us now at 1-888-853-8372 and we'll be more than happy to discuss ways to help you increase your net worth through real estate investing.
