How to Make Smart Decisions in HOT Markets

There’s no doubt that in certain areas of the country the Market is HOT again. It’s all too easy to get caught up in the HYPE and overlook the true value and the real numbers that make the Property a good overall investment. THAT is where Revestor comes in.

Finding the Right Investment

  • Don’t get caught up in the HYPE like everyone did in 2005
  • Don’t make the same mistakes that everyone did back then
  • Never invest based on potential Appreciation alone
  • ONLY invest if you can add VALUE through repairs/rehab OR if the Property Cash Flows.

Before you acquire your next Property run the numbers through Revestor so you can make a better decision for you and your family’s future.

Cash Flow

Cash flow is a key real estate indicator that is often used in real estate investing to help determine risk and value.

If real estate investors use cash flow, why wouldn’t you? After all, buying a home to live in is also an investment.

Cash flow is defined as the amount of money left over each month after all expenses and mortgage payments.

Gross Rental Income: $2,000/mo

–  Expenses:       $800/mo

–  Mortgage:       $1,000/mo

________________________

= Cash flow:       $ 200/mo

Expenses can include Taxes, Insurance, HOA, Mello Roos, Management, etc.

 

 

 

 

 

 

 

Mortgage is the financing costs of the property based on the interest rate and down payment. Mortgage payment should not include taxes and insurance since you are already accounting for them in the expenses section. You are certainty welcome to impound your taxes and insurance and pay them along with your mortgage just make sure you don’t double count.

While there are other key real estate indicators you should take into account, cash flow is one of the most important.

Whether you are a homebuyer or a real estate investor, knowing if you can rent a home for your payments is important and can help bring a piece-of-mind.

If you were to lose your job, get relocated, expand your family, or experience any other major life event it helps to know if you don’t have the option of selling that you can turn the home into an investment property. Not only does this scenario help your retirement portfolio but can also help increase your chances of getting qualified to buy a new home.

Back in the real estate bubble investors were willing to sacrifice cash flow and earn negative cash flow in the hopes that the property would go up in value (appreciation). It is never a good idea to buy a property based on the potential for appreciation alone. Some say appreciation is a bonus. I’d go even further to say that appreciation is a gift for living in America. You don’t get appreciation if you live in some parts of the world. Be grateful for it and use it wisely.

Don’t make the same mistakes that your friends and neighbors did in 2005. Get educated at www.revestor.com and make your buying decisions based on quantifiable key real estate indicators.

Real Estate as a Tool to Finance College

The Charfen Institute just came out with an article in their CIAS newsletter titled: “More Parents Using Real Estate to Finance Kids’ College.

The article discusses the strategy of purchasing a cash flow property with a 15 year mortgage and selling the home by the time your child reaches college.

A poll conducted by the College Savings Foundation revealed the following key stats:

  • 40 percent of parents are not very confident that they can reach their college savings goals
  • 34 percent of parents say they know how much they need to save to fund their child’s college education, up from 27 percent last year
  • 48 percent of parents are looking to education loans to pay for college, most of which will be signed over to their children
  • 29 percent of parents expect financial aid to cover up to a third of college costs, down from 35 percent last year
  • 38 percent of parents expect no financial aid at all, up from 28 percent last year
If you are a real estate professional it is time to discuss this strategy with parents who have children who are 3 years or younger (there are many lead generation tools out there that can help you find this demographic). If you are a parent with kids that are toddlers it is time to find a property to invest in for your children’s education and future. Failing to plan is planning to fail.