10 Reasons (7, 8, 9 and 10) Why I Like Real Estate As An Investment

(To read the prior posts regarding Real Estate Reasons To Invest select the desired post: 1-2, 3, 4-6.)

Number 7

Assignment of the agreement. You can assign the real estate agreement for a fee. If you are not interested in actually owning the piece of real estate you can negotiate a stellar deal and then sell or assign the agreement to another buyer for a handsome fee. You don’t even have to take possession of the property to make money from it. Sweet deal eh. But of course you want to have a contingency plan in place in the event you need to go through with the purchase.

Number 8

Little or No Money Down! You can buy a piece of real estate with little to no money out of your pocket. By finding the right type of seller (motivated) you can purchase real estate by taking over payments (make sure you understand the details of the loan you’re assuming).

Depending on your exit strategy (selling on a Rent-to-Own, or Lease Option contract) you can put down a little money to purchase and get a return of your initial funds while your tenant is renting and improving their credit and financial situation to be able to purchase the property from you at sometime in the future.

Another scenario is buying a deeply discounted property with a short-term loan and then refinancing to pull your funds back out to use again.

Number 9

Legally Pay Your Taxes Later. You can sell the investment property and purchase another one and legally defer any taxes on the profit owned. This means you get to use that money that normally would go to Uncle Sammy to make YOU more money. Why pay tax now if you can use the funds to accelerate your returns.

Number 10

Leveraged Wealth Generation. You can use other people to pay your mortgage payments on your real estate investments. If you have purchased right, you get to use tenant payments to pay your monthly payments associated with your property. So while they are paying the bank, you get to sit back relax and watch your assets grow in value. This growth in value comes one from the appreciation of the asset over time and two from the reduction of your principle on your mortgage over time creating more equity in your property.

So there you have it, just a few of the many, many, many different benefits of investing in real estate. There are also several very passive, secure ways to invest in real estate that I did not mention in the 10 Reasons (Click here to find out more.).

The Simple Warren Buffett Approach to Real Estate Investing

From what I understand about Warren Buffett, is that he likes to keep things simple.  He is said to have two basic rules of investing that he follows.

Rule 1: Never Loose Money

Rule 2: Always Remember Rule Number 1.

By following this simple approach in any aspect of investing whether it be stocks, or real estate you should consistently do well.

Why does this approach work so well?

I think Phil Town’s Rule # 1 investing approach, simplifies Warren’s (like I know the guy) approach to investing. The key is in doing the back ground research (due diligence) required to be able to attach a value to the company you are investing in. Really get to understand the company or in our case it is a real property.

By doing the research on the company’s past performance, and the people in charge, a level of predictability can be established. By looking at the numbers a value can then be established for that company today and in the future based on its past performance.

The risk can be reduced through the purchase of the company at a deep discount, which gives a margin of safety for any miscalculations or hidden issues that may come up in the future.

The company should also be one you would be willing to hold for the next 100 years.

It makes sense doesn’t it? If you know what should happen in the near future, and how an asset should perform, then the otherwise tough decisions become easy decisions when the asset doesn’t perform. Good decisions can be made based on the numbers instead of emotions.

My approach is similar, only the principles are applied to real estate. I’m looking for those situations in which the value of a real asset can be purchased at a significant discount. By sifting through the numbers a realistic value can be determined as well as the future expectation for appreciation performance (yes, properties are appreciating even with the current market conditions).

Once a market value is determined then comes the way to realize or create the equity in the property. This happens either through negotiating and buying the property at a 20-30% discount, or through property improvements, structural changes, zoning changes, income changes or simply by changing the perception of the property.

Knowing the numbers in a particular area and buying at a discounted value, allow us to ride out these market fluctuations. Buying a property at a 20% discount in a good area allows us to hold when the market declines 5-10 or even 15%.

Makes sense doesn’t it.

Anyway… there is HUGE money to be made in finding the discrepancies in value.

Risk is further reduced by having a contingency plan for each asset that works in both the short-term and the long-term.

In reality there are few things that are 100% predictable, and stuff happens out side our control. So in order to keep the cash invested and the assets safe, there is also a long-term plan. This plan allows us to continue to benefit from holding the property in our long-term portfolio.

As everyone is aware with the current market conditions not all real estate continues to appreciate without pull backs. With our approach we are able to ride out these market fluctuations.

So in reality our approach works in markets that are appreciating and markets that are depreciating.

Email me and we’ll set up a telephone appointment. This is a no obligation initial consultation on some of the strategies you can use to build your personal cash generating machine.