Buy and Sell Rental Properties

Why Specialize in Buying & Selling Small Rental Properties?

Pacific Beach Real Estate - Mission Beach Real Estate, San Diego County Real Estate

There are four major reasons why investors choose real estate as a wealth vehicle: Cash Flow, Appreciation, Equity Build-Up and Tax Savings. I am continually asked for information on how to select and analyze investment properties. Because there has been so much interest expressed by my clients and others looking for ways to build wealth through investment properties, I decided to not only write this report but also put together a short course on Real Estate Investments. My goal here is to describe how each one of the four reasons for using real estate can be achieved. Let's begin with a demonstration of the before-tax wealth accumulation potential of 3 types of investments.
  • Savings: If you were to invest $40,000 in a CD at 5%, compounded daily, your investment would grow to $84,675 in 15 years.
  • Stocks & Bonds: Alternatively, take that $40,000 and invest it in a "high flying" mutual fund which grows at 10% annually and your investment would grow to $176,090 in 15 years.
  • Real Estate: Invest that same $40,000 (20% down) in a $200,000 real estate investment, appreciating at 5% annually and in 15 years the value of the property will grow from $200,000 to $415,785. Now, taking this a step further, assume that a 15 year loan was used to purchase the property. What is the future net equity potential of the investment?
Future Value of Property in 15 Years

$415,785

Minus 7% Overall Cost of Sale

- 29,105

Minus Loan Balance

0

= Net Proceeds From Sale Before Tax

$386,680

In these examples, we determined that if we invested $40,000 for 15 years, we would be able to accumulate wealth (before tax) in the following amounts:

Certificate of Deposit

$84,675

Mutual Fund

$176,090

Real Estate

$386,680

If you are like me, you enjoy and get more out of a graphic-type display. Is that "left or right brain?" The obvious question which each of us must answer for ourselves is: Which is the better investment? Typically, it will depend on your:
  • Need for Liquidity
  • Yield Requirements
  • Risk Tolerance
  • Desire for Cash Flow vs. Equity Growth
Due to overwhelming interest for information on "Real Estate Investment Analysis," I have developed a comprehensive 40 page overview of all the major real estate investment concepts. It is not an exhaustive study, but you will rarely find all the important procedural issues covered in one, easy to understand publication. I cover such items as (not all-inclusive):
  • Rental Income & Operating Expenses
  • Ways to Analyze Investment Properties to Determine Value: (Gross Rent
  • Multiplier, Cap Rate, Cash on Cash, etc.)
  • How to Determine an Investor's Rate of Return
  • Before & After Tax Cash Flow
  • Tax Savings/Advantages
  • Debt Coverage Ratio
  • How to Price and Market Investment Properties
  • IRC 1031 Tax Deferred Exchanges
Call, write, email or smoke signal me for a copy. Oh, by the way... it's FREE!!! Just tell your friends where you got it.

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