Historically real estate has always been viewed as an investment and in most cases someone’s largest asset. This has been a fairly true statement with an average of 3-5% appreciation in value up until the early 2000’s. When real estate started to skyrocket in 2004 almost everyone jumped on the investment band wagon and many people made a lot of money during that time period.
Personally as an investor I bought properties and advised my clients to buy cash flowing properties, with the occasional short term flip mixed in. By buying cash flow properties even if the property value dropped the rental income should be stable and in our current market it is actually on the rise. Many of my clients used my cash flow investment system to purchase their primary property. We would evaluate what the monthly payment would be on their dream home and adjusted our investment stragety to cover the entire monthly cost with cash flowing assets. I would buy enough cash flowing properties to cover the cost of a liability such as a primary residence or automobile. A primary residence is a liability you ask? Yes, as author Robert Kiyosaki writes in his “Rich Dad, Poor Dad” series anything that requires your constant cash input to sustain it is considered a liability. If you lose your job tomorrow who will pay your mortgage? If you lose your job and you own a rental property the tenant will continue covering the cost of ownership on your “Asset” and hopefully provide you with additional income on a monthly basis. I am still a firm believer that real estate is a true path to wealth but it must be viewed as a long term investment with a clear business plan in place to reap the rewards in any market.
“When I met Rob I was coming out of a divorce and looking for a new home for me and my 3 children. I was looking for a large single family home and had a sizable down payment to offset my payments. After some discussing, Rob showed me how I could leverage my cash by buying 3 cash flowing rental properties which produced enough monthly income to pay for each property and cover my monthly mortgage on my new farmhouse!!! Needless to say without Robs business savvy I would have settled for a basic home and would have been stuck with a huge monthly payment but now not only do I livein my home for FREE but I have a passive income for many years to come. I can’t thank Rob enough for his insight and the time he took to help me and my family.”
Catherine
Homeownership is a powerful thing and even if an investment strategy like the one above does not work for you, I advise anyone with stable income to consider the possibility of homeownership just be careful to stay in your comfort zone and don’t bite off more than you can chew.
-Rob Burns, Realtor
http://www.jaxhomeseller.com
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