Time to Establish a Real Estate Investment plan?

Low interest rates and low home prices, coupled with reduced retirement accounts, are causing many to consider a real estate investment plan.  Throw in the mistrust caused by numerous financial scandals, plus the easy-to-understand basics of rental real estate, and it looks even more attractive. 

 

It is pretty difficult for a property manager to “cook the books” when an owner reviews rents and loan expenses each month.  Additionally, the advantages of leverage in increasing one’s net worth can’t be ignored. 

 

Invest $100k in the stock market and when it doubles in value you’ll have $200k equity (timeframe? your guess is as good as mine).  Invest $100k in a $300k investment property and when it doubles you’ll have $400k of equity (600k-200k loan).  The key is to have a “break-even” or a “positive” cash flow.  You’ll then have the staying power to wait for the value to double. 

 

Over the last few decades, you had to go to Texas and other similar areas to achieve a good rental cash flow.  Now you can find those opportunities in Northern California and even here in the Bay Area!

 

This is a great time to start buying investment property, perhaps one every year or two, thereby dollar cost averaging into the eventual real estate recovery.

 

Jeff Stricker