Steven VanCauwenbergh is a landlording Phenom…at 45, he owns over 250 units, which he runs hands-off with a combination of people and technology. He’s presenting an all-day workshop at the 2019 OREIA National Real Estate Summit on exactly how you can do the same. It’s October 31st, and it’s included with your (cheap) registration fee. Sign up at www.OREIAConvention.com!
Building wealth is all about the ROI (Return on Investment). Making your money work for you instead of just stock-piling it and hoping it will be enough to retire you. As with any type of investing there is risk involved in being a real estate guru. But it has been my experience that the benefits far outweigh the risks.
One of the most advantageous things about real estate investing is the ability to use leverage instead of cash to do your deals.
Let’s say you have $50,000.00 that you would like to invest. You find a rental property selling for $60,000.00. The fair market value of the house is $70,000. Banks will generally loan 70% of the fair market value. Therefore, you could get a loan for around $52,000. You use $10,000 of your “investment” money and purchase the rental property.
If it’s a 3-bedroom house in a fair neighborhood. The house would easily bring $750 per month or more in rental income. Yes, there are expenses—taxes, insurance, the payment on that mortgage, vacancy, maintenance. But even after all that, in effect the $10,000 you invested in purchasing this property is giving you a return of 15%. How many other investments in your portfolio are showing you that kind of return? Don’t forget, you’ve only spent $10,000 of the $50,000 that you are planning to invest, so you can do it 4 more times.
Another super quality of buying real estate is you earn that ROI tax deferred. You do not pay taxes until you sell that property. Your investment is going to grow and appreciate. The mortgage is going to decrease, and you are going to build equity. Someday you may sell the property and have to pay taxes on the capital gain, but it should be at a lower tax rate.
If you want tax free results, you could use a 1031 exchange to defer the taxes even further. You could pass it on as an inheritance. You could use a charitable remainder trust and you could even use installment sales to spread out the gain over time. There are lots of ways to exit that real estate and defer the taxes.
Now… get ready for the big one!!! Real
Estate Investing can get you tax free cashflow! You take your rental income minus
depreciation, mortgage interest, property taxes, maintenance and other expenses
like travel, dining, entertainment, Home Office, PDAs, laptops, Internet, cell
phone. On paper it looks like you’re losing money even though you have
cashflow. Yes… you heard me right, you have tax free cash going into your
pocket with a leveraged investment.
To coin a phrase that has been around for a while “JUST DO IT!” I’ve built my empire with real estate investments. The portfolio I’ve built would allow me to retire today, but what fun would that be? I love this business!