What sets investors apart from traditional home buyers is that investors buy homes to make money, period.  Whether they choose to rent it out, or decide to fix it up and sell it for profit, investors need to know beforehand that the property is a good investment.  The only way that they can ensure themselves a profit, is to make money on the purchase price of the home; by buying at a discount to either its market value, if selling, or its rental value, if renting.  Investors cannot afford to hope; they need to know that their property will give them a good return on their investment.  By buying your home at a discount, you become an investor in your own home, and this small, but significant, step can change your life.

Become an Investor

There are two primary ways for gauging value on a home: through it's rental value, or through it's market value.  A home's rental value is the price you could expect to receive, were you to rent it out.  This value is based on the area's average rental prices, and investors will either purchase homes that are in cheaper areas, or discounted homes in nicer areas.  A home's market value is based on the comparable sold and active properties in the area: basically, all the "competition" in the area currently on the market, and recently sold.  Investors like to, and need to buy properties at a significant discount to market value; often 10-40% off, with a smaller margin if they plan to rent the property, and a larger if they plan to sell.  This is how, as a homeowner, you could make some serious money.  We are here to help you do that, since we specialize in pairing investors, a.k.a. homeowners,  with good investment properties!  Imagine for a moment.  Currently, the IRS lets you walk away with tax free capital gains from your primary residence, as long as you have lived in the property for at least two out of the last five years. If you purchased a $200,000 property, at a 20% discount, you would have the potential to make $40,000 tax free over the next two years!  That’s $20,000, per year, or a 50% increase in income for the average middle class wage earner making $40,000 per year!  Let us help you make your home the investment it can, and should, be.

4 Money Making Steps

1. BUY AT A DISCOUNT!  As mentioned above, buy your home at a significant discount of 10-40% less than market value. Remember, though, that a $150,000 home selling for $100,000 is not a deal if you have to put $50,000 into it...it's a full-price, $150,000 home!  A good rule of thumb is that the more work required, the more profit you require.  For a home that needs little or no work, buying 10-20% off is definitely reasonable; if there is work to be done, then you will need a bigger margin to work with. Discounted properties are easier to find, now then ever, thanks to the dramatic rise in foreclosures, bank owned real estate, short sales, and vacant rental properties. We are real estate experts that specialize in investment properties, and we are ready to help you find your investment home.

2. Use your property as a debt reduction tool. Statistically, most Americans pay hundreds of dollars per month on high-interest debt: be it credit cards, short term loans, or even car loans. There is no point in building up a savings or investment account earning 3-7% a year, while paying 12% on car loans, and up to 30% on credit card debt!  You can save hundreds, even thousands a month by just rolling all of your higher interest debt into your property. The real trick to making the most of consolidating your debts, is to keep making the same payments you were making before, however, now you are applying that to your mortgage!  This will allow you to pay down your debts very quickly while adding to your equity when it comes time to sell your home.

3. Rent from yourself.  By following this simple step, you can force a savings account.  Simply find out what the rents are for similar properties in your area, and make that payment to your mortgage.  If your mortgage is $1000 a month, but local rents are $1300, then you apply that extra $300 to your mortgage. By paying yourself rent you are creating a forced savings account that will equal thousands of dollars per year!  By doing this you will be better off than the average American, since most have a near zero savings rate.  The easiest and most "painless" way to do this, is to setup automatic payments of the rent amount; this will keep you honest, since the money will never be available for you to spend or waste.

4. Know your competition. When it comes time to sell your home, you will be competing against other similar properties in your area.  You will always want to be one of the best in terms of amenities, price, and look and feel. Your goal should never be to significantly out-do your competition, but rather to be "slightly better,"  because your competition will automatically put a price cap on your home, and drastic improvements and updates will not earn their money back on its resale. Instead, spend your money on simple, easy fixes, like paint, carpet, refinishing woodwork, and basic landscaping. The most important things in selling a home are cleanliness and staging.   A house that does not show well, will not sell well; it’s really that simple.


End Goal
The end goal of your first investment should be to improve your current financial situation by eliminating, or at least, dramatically reducing, your high interest debt, as well as establishing a lump sum of tax free cash once you sell your “investment home”.

After two years in your home, you have three main options:
1. You can continue to live in your home.
2. You can sell you home, pay off your debts, and have the rest as tax free cash.
3. You can rent out your home for the next 2-3 years, and then sell.

After your first investment home, your financial situation should be significantly improved. You should have less debt, less monthly expenses, and a decent amount of money in the bank. Once you become a seasoned investor, you should be able to add an extra $15,000-25,000 of tax free income every year just from your home. The best part about making your home your investment, is that there is very little risk: you don’t have to worry about renters, or extra mortgage payments... and you simply do what you would have done anyway, but better!  It's time to make your home work for you.  Contact us to get started today.
 

Investment Real Estate 101 -  Make your Home an Investment -  First Time Home Buyers