It goes without saying that the stock market beat everyone up in 2018. However, it looks like 2019 is starting out better! Whew! Investing in real estate also has its ups and downs, some years are better than others. But if you buy right and understand that it is a long game, you will be OK. Have you heard, you make your money when you buy, not when you sell! Huh?
Understanding Real Estate Investment Reasons
One of my mentors always said that people buy rental property for three reasons: Cash Flow, Appreciation, Depreciation.
An ideal Cash flow purchase is buying a property at a reduced price and renting it out for a high double-digit cash on cash return or 12-18% return before expenses. This property is usually in a declining neighborhood and has a limited investment lifespan, but the payoff is quick!
This involves buying a property in an appreciating neighborhood and location. It will cost you more going in, but you know why you’re paying more. Your “profit” is evident in the form of your tenant paying for the property while it appreciates. (no instant gratification here)
When either of the residential properties above are rented, they can be depreciated on a 27.5-year schedule. This gives you a nice break on your taxes and needs to be calculated into your overall strategy. (We suggest that you consult with your professional tax person on this one.)
Making Informed Decisions
Do you know why you’re buying investment property? Talk with us about your real estate investments. When renting, buying, or selling, we would like to help!
To your success!
Do you have questions about maximizing your return on your real estate investments? I invite you to call me and discuss your needs. With many years in the business, I’m confident our team can guide you in the right direction. We help our clients rent, buy, and sell real estate in the upstate of South Carolina.
Call 864-395-6538 for more info on how to make money in real estate!
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