real estate · wholesaling

Fascinated By Real Estate Business Boom

If you checked out this blog last year, you know that I’ve been getting more and more interested in real estate over the years. I was looking back 10+ years ago and laughing about some of my blog posts on kids toys and learning to be a new husband.

Well, 10 years later with three sons and another baby on the way and a man starts to take a good hard look at his assets. In particular, I’ve been looking at real estate an becoming an investor.

House Flipping TV Shows Are Everywhere

When you turn on the TV today, it seems that everyone and their uncle are becoming house flippers. I mean, just look at the number of results on Google for a simple “house flipping tv shows” search.

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There are 10+ shows there without even blinking – Flip This House, Flip or Flop, Flipping Vegas, Flipping Out, Property Ladder and the list goes on.

All of these shows promise that making wealth with real estate couldn’t be any easier. And better yet, they wrap up an entire project in a 22 minute show! Crazy. The profits always seem to be a bit higher and the costs a bit lower. I guess small profit margins don’t make for good real estate TV these days.

Anyway, because of all of these shows, you see a lot of people getting into the real estate business. Many people try to flip but soon find out that they may be in over their head. First of all, they need the cash to buy properties. In the real estate investing space, if you don’t have cash to close quickly, you are in a tight spot to try to get any good deal.

Then, once you get the property, you better be sure you know what you are doing in terms of rehabbing. It’s easy to let your rehabbing costs get out of line quickly. Then, instead of making money, you’ve quickly lost your investment. I’m pretty sure that’s not the way it’s supposed to go.

Wholesaling as a Real Estate Alternative to Flipping

If you don’t flip, another way people try to break into the real estate investing space is by wholesaling real estate. What is wholesaling? Basically, it’s the process of acquiring a property from a motivated seller at a discount price and then turning around and selling that property to another buyer, often times another real estate investor.

The advantage of working in this space is that you often times have less risk than a house flipper. Because you are generally holding onto the property for a very short period of time – often times only a few hours – you don’t have all of the construction risks that come with house flipping.

Wholesaling companies are basically in every city in the United States, and you find a TON of information on sites like Bigger Pockets to learn how to get started. Once a wholesaler acquires a property, they often times become the lead source for those who will flip the house. When you have a wholesaler who has integrity, it can be a fantastic relationship and a great way to find deals.

That said, there are a lot of people who wholesale because of the low barrier of entry that you cannot trust. Those people aren’t too hard to spot. When you are around them, you kind of get that “icky” vibe. I’d recommend you find someone who puts their name and face on their website and has some good reviews and testimonials. This site, WeBuyNKYHouses.com is a good example. The owners face is on every page, and you can get a feel for the personality by watching all of the YouTube videos on the site.

we buy nky houses - trust a wholesaler if their face is on their site

As I mentioned, Bigger Pockets is an excellent source for educating yourself on both wholesaling and flipping. And beyond learning, it’s a wonderful place to network with people locally and nationally. They are constantly coming out with excellent content on their blog, their member blogs and with their podcast. It’s all free. So, if you want to learn more, go check them out.

Buy and Hold for the Long Term

While I think flipping and wholesaling are both great for immediate income, my passion in real estate is to buy and hold properties for the long term. This is where the benefits of appreciation and amortization of the loan really start compounding in good ways for you.

The other big benefit of real estate for me personally is that I like being able to see and touch my investment. If I invest in a mutual fund somewhere, who knows what that company is doing to earn a profit. I like being able to know I’m giving someone a good place to work or live.

No matter what area of real estate you are thinking of getting into, there is no question it is a boom. Learn the lessons from 2008 and then go forward and make your wealth in real estate!

assisted living · real estate · Uncategorized

Real Estate Opportunities in 2016

Over the course of the past 8 years, another thing that has grabbed a lot of my time and attention is the study of real estate.

Let me be straightforward. I love real estate.

I think it’s an amazing way to build wealth.

Now, a lot of people who got into real estate and then got hammered after the great recession would argue differently. Not me. I’m still in.

Why do I like real estate so much?

There are lots of ways to make money in real estate. Principally, there are 4 basic ways:

  1. Cash Flow
  2. Appreciation
  3. Amortization
  4. Depreciation

Let’s take a quick minute to walk through each of these.

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Cash flow is pretty self explanatory. When you take all of your revenues of the property and subtract all of your expenses, including debt if you are carrying a mortgage, the cash flow is what you have left. For example, is the property renting more than it is worth. If so, you have cash flow.

Next, is appreciation. What is great about real estate is that the value tends to go up (or stay the same, based on how you look at inflation). But historically, over time, in terms of $’s, a real estate market will go up over time. So, if you simply control the real estate (or manage the cash flow), you will make money in that a house today is generally worth more than it was 20 years ago. Now, this depends a lot on each market. But typically across the board, most markets will appreciate.

Amortization. This is simply paying down of a loan. So, your monthly payment goes towards interest and taxes, but part of it also goes towards principal. That is, if you have a renter who is covering your mortgage, each month, some of their dollars are adding to your net worth. Nice. So, how many units do you want?

Depreciation. This is another great one. Basically, this is a “non-cash” expense, which means you get to deduct expenses on your taxes for the property wearing down, even if you didn’t have to pay for any actual accrued expenses that year. This saves you money on your taxes.

I love it. So many ways to make money. Backed by a real asset. I can actually see and touch my investment. It’s not some elusive stock to a company that I have no idea who manages it.

So, what are the opportunities in 2016?

There are always hot residential markets. In the past few years, Texas has been fantastic. How do you know where to look? Follow the jobs. Dallas, Austin, Ft. Worth have all been very hot because they have been growing in population and jobs. Follow the jobs, demand increases, and real estate prices go up.

In the same line of thinking, follow the demographics. The boomers are aging. So, different than your residential, multi-family, or commercial types of investments, there is a lot of money flowing into health care for these seniors.

In particular, there are senior living projects going up all across America. These can range from independent living, to assisted living, memory care and full nursing care. A little sub-niche that has spun out of this that I’ve really had my eye on is residential assisted living. There are little operators all over the country who are opening up smaller senior care homes that actually feel like a home, vs. an institution. Pretty smart.

There are all kinds of ways to make money in real estate. And, I’m going to do some of that right now.

Have a good day!