Historically, Real Estate has shown a consistent growth in value, even when other investment choices were less stable. As your property value increases and your mortgage is paid down your net worth increases. The beautiful thing is that your tenants are, in effect, making your mortgage payments for you!

Consider what could happen if you owned only ten investment properties. If each property was valued at $100,000 and produced enough income from rent to pay monthly mortgage obligations and other costs then in thirty years (after your mortgages are paid off) you could be a millionaire!!

Additionally, there will most likely be tax advantages available to you for each year that you hold a long term Real Estate Investment. Although there are definite limits to these advantages, they can be substantial.

If you have taken the time to read this web site then investing in Real Estate probably does appeal to you. If you are interested and motivated enough to learn its rules and strategies you can significantly contribute to your financial security, and you can add diversity, security, and big profits to a lifetime financial plan.

You cannot be successful in Real Estate investing if you never invest in Real Estate. Inaction, fear of change, a poor attitude, or the unwillingness to break ineffective financial habits can each keep you from realizing the benefits that accompany ownership of investment Real Estate. In order to succeed it is important to have a “winners attitude” and to keep your fear of a new idea at bay. Be dedicated to making a positive change to your financial situation.

One of the top priorities at Equity Quest Real Estate is to ease the investor’s fear. Through our comprehensive package of services we strive to make the experience as simple as owning a mutual fund. Teaming up with an investor with real world experience will also help alleviate fear and is one of the easiest ways to get started and be successful. Take advantage of Rob’s personal investment knowledge and experience. Contact Rob today!

Real estate is probably the best weapon available for inflation fighting. The rate of increase in the value of real property consistently outpaces the Consumer Price Index (the governments measuring stick for inflation). Simply owning any Real Estate will likely put you ahead of inflation.

However, you must understand that simply being ahead of inflation only keeps your money from losing it’s buying power. It doesn’t make you rich. Appreciation is what helps you to make money.

The combined effects of inflation and appreciation are what will produce a higher price when you are ready to sell your holdings. Many novice investors call that sum their profit and, in fact, the IRS taxes you on it (unless you are selling your primary residence in which case the IRS currently allows a large amount of that capital increase to be tax-free depending upon your marital status). However, you can more accurately gauge your success if you understand the effects of inflation and appreciation on the value of your property.

Appreciation is often confused with inflation. If the rate of inflation in real estate is 4% a year and a property increases in value from $100,000 to $104,000, there has been no appreciation. The property owner may feel that his investment is making money but, in fact, it has just stayed even in terms of real worth. Appreciation happens when the worth in real dollars (not inflated dollars) increases.
Appreciation is the goal of every investor who buys and sells real estate. To choose property that will appreciate significantly (and therefore profitably), you must know the economic, geographic, and demographic aspects of an area and you must have a sense for those aspects of real property that increase desirability and sales appeal.

When you invest in rental property, you are using OPM (other people’s money) to help buy the property (mortgage), you are also using other people’s money to pay for the property and its expenses (rental income). Real estate is the only investment vehicle with this kind of special subsidy. Income from your rental property can pay most of the expenses of the property and may be able to provide extra monthly income. All the while it can effectively act as an inflation hedge and appreciate, too. This is an excellent deal if you can get it—and you can.

In addition to the tax breaks available, our government adds a perk for older Americans. You may know that persons who continue to work after claiming Social Security benefits risk the reduction of those benefits. However, rental income is not counted when calculating the amount you can earn before benefits are reduced! This fact makes rental property with positive cash flow an excellent opportunity for younger retirees.

Borrowing large amounts of money (getting a mortgage) in order to make a real estate purchase is one of the main fears that will keep many would be investors on the outside looking in. However, you must understand that using borrowed money is a necessity for realizing profits in real estate investment.

Consider this scenario:

You purchase a house for $100,000. Your down payment is $10,000 and you take out a mortgage for $90,000. Sell the house five years later for $150,000, pay off the mortgage, and put $50,000 “profit” into your pocket. At first glance you might think you have made a return of 500% on your original $10,000 investment. But, this is not quite correct.

You must also consider the cost of carrying the mortgage (interest). You create leverage when the cost of borrowing money is less than the free and clear return from the property. “Free and clear” means the cash-out number you get after all expenses, such as taxes, maintenance, and selling costs, are deducted.

You earn a substantial return on investment because of the use of OPM to increase the base upon which the investment will appreciate. The smaller your down payment, the greater your leverage and therefore the greater the possibility of a large return on your investment capital.

Consider this illustration:

Your $10,000 down payment allows the purchase of a $100,000 property. The percentage of inflation and appreciation then affects the entire $100,000. So your $10,000 is growing just as though it were $100,000. This concept works as long as the cost of borrowing the $90,000 is less than the rising value of the property.

Understanding and using leverage is one of the most essential keys to success in Real Estate Investing. Once you grasp the principle, you can learn to use it in ways that will accomplish your investment goals while meeting your risk profile.

THE ECONOMY: You probably have no control over our national economy, but you certainly can be educated and understand the nuances of your local economy.

MORTGAGE MONEY: You probably don’t control the financial marketplace, either, but you can search out and find the best terms and the cheapest money available. With careful attention you can ensure that your mortgage loan contract has no snares and does have safeguards for the borrower.

THE QUALITY OF YOUR INVESTMENT PROPERTY: You have complete control to choose or not to choose a property. To limit risk, you can get professional help, such as inspection services, accountants, lawyers, and buyer-brokers. Most importantly, you have your own skills and knowledge, which you can sharpen at will.