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Real Estate Information |
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Finance Your Real Estate Investment Properties
Unlike traditional residential real estate mortgages, real estate investment financing is way more creative and offers more options than you think. The golden rule in real estate investment is OPM (Other People's Money). I have enough money; shouldn't I buy my real estate investment for cash? No, I absolutely advice against investing large sums of cash into a single real estate investment. There are two reasons why not. First, you give away most of your profits by not leveraging your real estate investment. Second, it is far too risky to put every egg into one basket. Let me explain the leverage issue for a moment. I will give you an example of a $100,000 investment property that typically increases its value (appreciates) by 7% average a year. Maybe more, maybe less depending where you live. Paying all cash for this property will yield in a 7% appreciation profit plus the net profit from renting the place. Now you're looking at roughly 15% of returns. If you're conservative with your investments you might be satisfied with this kind of a return. These days you might get equal or better returns with other conservative investments minus the hassle of being a landlord. But you don't mind being a landlord, because you understand and utilize the leveraging method with financing your real estate investment. With the example above you will make roughly $15,000 a year in profits from your investment. Now let's take a closer look at what leveraging can do for you. Today a typical real estate investor can get financing as high as 95% - 97% of the purchase price. Occasionally 100% financing is available as well. But this would be totally unfair in this example to compare this with all cash purchasing. 15% return sounds like a lot, but wait till you see this. Let's assume that the rental income will cover all your expenses including the mortgage payments. Taking the same example from before your net return would be the 7% appreciation profits of your property. This would translate into a $7,000 a year profit. With a 95% financing in place you would get $7,000 return on $5,000 (your 5% down payment) invested. This is a whopping 140% return on investment. With the same $100,000 you can go out there and get 20 investment properties, finance 95% of it and make an amazing $140,000 profit a year. This beats the projected $15,000 profits with an all cash transaction any day. Of course you will have a lot of trouble to get financing for 20 properties in a single year. Typically 5-6 new rental property mortgages are the maximum lenders will allow these days. This is the signal to get creative with your financing structures. In this case sellers financing would be your key to achieve your goal of maximum leverage of your investment dollars. Despite the message from all these late night infomercials, seller financing is harder to get than they want you to make believe it is. It all depends on the seller's ability to offer seller financing and the seller's motivation. Only about 1 out of 20 properties for sale are able to get seller financing. That means that there's no mortgage balance on the property. From this narrow selection the seller must be motivated to sell under these conditions. This could be tax reasons, time constraints, personal reasons and many more. As you can see this translates into a lot of work to achieve your goals. But let me tell you one thing. This separates the tire kicker real estate investors from the real go-getters. Wouldn't you agree that a little bit of hard work and determination is well worth it to build a real estate empire? I think it is well worth the trouble and hard work. At the end of the day you keep building your real estate investment portfolio and sooner than later you will be able to cash in. Sincerely, Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner.Learn more about real estate investments at http://www.suncoastrenttoown.com or send a blank email to mailto:suncoastrenttoown@getresponse.com
MORE RESOURCES: Blackstone's Wesley LePatner, a mentor to women and real estate investing leader, killed in NYC office shooting Business Insider The real estate market: 5 key themes to watch this week Real Estate News by RealEstateNews.com AI Is Transforming Real Estate Marketing | Florida Realtors 18 months later, Blackstone still sees real estate comeback ahead Private Equity Real Estate | PERE Real estate: Condo prices rise in Indian River County; fall in Martin, St. Lucie counties Treasure Coast News Troy Furbay has been appointed Managing Director, Hospitality at Crescent Real Estate LLC Hospitality Net ‘Walking beside him’: Daughter continues stepfather’s real estate dream Mountain Home Observer Richland County property transfers recorded July 21-24 Mansfield News Journal Double digit price increases for Putnam real estate Mid Hudson News Alex MacWilliam of Alex MacWilliam Real Estate in Vero GlobeNewswire Haag-Brown Commercial Real Estate to open Bentonville office Talk Business & Politics RE/MAX revenue continues to slip despite agent gains Real Estate News by RealEstateNews.com Executive Killed in Manhattan Shooting Was CEO of Blackstone's $53 Billion Real Estate Megafund Realtor.com Real estate transfers: 7/30 Toledo Blade Inside Zillow’s summer launch: 5 new tools built for agents Real Estate News by RealEstateNews.com Anywhere revenue inches up despite ‘weird’ housing market Real Estate News by RealEstateNews.com Unlock MLS calls new listing option ‘a win for seller choice’ Real Estate News by RealEstateNews.com Real Estate Transactions | July 14-18, 2025 Republic-Times Real estate office renovating former daycare The News-Enterprise Exclusive: Apple to buy another Silicon Valley campus for $365 million San Francisco Chronicle Ledge Road property in Newport sold for $3.3 million tops latest Newport County sales Newport Daily News What’s Rising Across the Upstate? Updates on 7 Real Estate Developments - upstate business journal What’s Rising Across the Upstate? Updates on 7 Real Estate Developments upstate business journal Santa Monica Ranks Second Most Expensive for Rentals as Real Estate Market Shows Mixed Signals Santa Monica Daily Press Christie’s Debuts Crypto Real Estate Division The New York Times Atlanta real estate tycoon Tom Cousins has died at 93 Rough Draft Atlanta Easton home on Sierra Drive that sold for over $1M 'epitomizes one-of-a-kind luxury' Enterprise News Population Growth in England and Wales: A Boon for Real Estate and Social Infrastructure Sectors AInvest Prospect Medical attorneys ask judge if company can abandon some of its Delaware County real estate CBS News Blackstone’s LePatner killed in NYC shooting Private Equity Real Estate | PERE With The Enolia, MCB Real Estate reinvents the residence hall for Morgan State University Baltimore Fishbowl Boardwalk Real Estate: Q2 Earnings Snapshot San Antonio Express-News RealPage buys Rexera, maker of 'AI agents' for real estate deals The Business Journals One of the world’s largest luxury real estate firms wants to help you buy a house — with crypto New York Post Apollo Commercial Real Estate Finance, Inc. Reports Second Quarter 2025 Financial Results Quiver Quantitative Gold Key Real Estate lewistownsentinel.com Commercial Real Estate Still Has a Software Problem Commercial Observer Brixmor Property Group's Q2 2025 Earnings: A Strategic Playbook for Resilient Retail Real Estate AInvest Fed Interest Rate Predictions: No Cut Expected Tomorrow, July 30, 2025 Norada Real Estate Investments Judge sides with LGBTQ+ Alliance in battle with ex-CEO Real Estate News by RealEstateNews.com The Future of AI in Real Estate Valuations: Understanding Tomorrow’s Appraisal Standards Appraisal Buzz WeWork Wants You to Know It’s a Grown-Up Real-Estate Firm Now The Wall Street Journal Partners Real Estate names a new top executive in Austin The Business Journals NexPoint REIT Offers Shareholders Choice in $0.15 Distribution: Cash or Stock Payment Options Stock Titan Virgin Hotels Chicago Flagship Sold in Strategic Deal Amid Timeshare Real Estate Shift – What You Need to Know Travel And Tour World Real estate: Home prices climb in Martin, Indian River counties; fall in St. Lucie County Treasure Coast News Cohen & Steers: Real Estate Woes Continue To Weigh Seeking Alpha |
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