October 2019 Newsletter

Rates are crazy low. Lower rates mean more affordable lending, or more for your money if you choose to reach higher.

Because it will appreciate. According to CoreLogic, “The overall home price index (HPI) has increased on a year-over-year basis every month for seven years.” The long-term price appreciation of real estate can provide one of the safest investments out there.

Because passive income is good. Yes, it’s nice to know there will likely be appreciation over time, but the real key to success with investment properties is passive income. I call this ‘mailbox money.

Having worked with a real estate investor for over 20 years (and seeing his net worth rise from just real estate 13 Million to over $70 million because of strategic investing), PLUS seeing my Dad invest in income properties (duplexes, triplexes and single family homes), he retired from being a truck driver at age 40 — it was a no brainer for me. If the property would net $100 (or in some cases just break even (you have to take repairs, maintenance, gardening, utilities, taxes, and insurance into the equation) and it is in an area that is considered revitalized — ‘happening’ or growing — SAY YES!

If it’s a duplex, you could rent out one side and live in the other side for FREE (the tenant could be paying your mortgage). If your child or grandchild is in college – might be something to think about — especially if its a popular school — that would be mailbox money for you after you pay it off (renting to students).

So WHY does this strategy work? Several reasons:

Appreciation (in this case is outpacing the interest on the mortgage note), and I strongly recommend utilizing a 15 mortgage if you can. To my wealthy clients — what is that adage . . . use OPM (other peoples money). Money is cheap right now.

Also, in many parts of the country including Northern California, New York, and right here in our own backyard — Broward County . . . it costs more to rent than buy! Look for my recommendation for a Mortgage Lender a little later. And, NO, your credit does not have to be perfect, and NO, you do not need a 20% down payment.

“The best part about rental properties is that they provide a stable income,” said Mashvisor. “What would be better than having a check sent to you every month? In order to have positive cash flow, you have to make sure you invest in a profitable rental property.“

To turn it into a short-term rental. The short-term rental market (AKA Vacation Rentals) has opened up a new world of opportunity for investors. By buying in the right location—by the beach, near a ski resort, or in close proximity to a popular annual event like Coachella, you have the potential of making a significant return in a short period of time. Just be sure to check the local laws, as lots of cities have been cracking down on Airbnb and other services.

Because it can help you buy the home of your dreams down the line. “Buying an investment property before your first home does not imply that you won’t have the funds to purchase your actual home at some point,” said Mashvisor. “In fact, investment properties that have been purchased wisely and have grown in value can offer you a sizeable amount of wealth and equity.”

Here is my favorite Lender — Norm Fisher at Supreme Lending — just give him a call at 954-270-2299 (more info about him and one of his colleagues — Kim Prat and their company a little later in the Newsletter).

Do a national search.
You’ll be surprised how many programs you can find. “Do you even know that down payment assistance (DPA) programs exist? You’re in good company if you don’t,” says The Mortgage Reports. “These programs help homebuyers with loans or grants that reduce the amount they need to save for a down payment. And there are more than 2,000 of them nationwide.”.

Check out statewide programs.
From the HUD site, you can search by every state plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands to see which programs are available for you.

Now take it local.
Don’t forget to check for programs in your city. The City of Los Angeles Housing + Community Investment Department offers up to $90,000 in financial assistance for first-time, low income homebuyers. In Memphis, there is a zero-interest deferred loan that provides funding for first-time homebuyers’ down payment and closing costs for eligible homebuyers through its Division of Housing and Community Development.

Search by your profession.
You’ve probably heard about VA loans for military members and veterans, but there are other professions that are eligible for down-payment assistance. The Neighbor Next Door Program is a program for law enforcement officers, firefighters, emergency medical technicians, and teachers that requires only a $100 down payment for eligible homebuyers. Because the program is tied to the idea of revitalization, homes in these communities are offered to eligible buyers at a 50% discount.

Check with your real estate agent or lender.
Doing your own research is key, but it’s always smart to consult a professional who is familiar with your specific situation.