Making Money

Making Money

Read this blog…and save it. Please.

Most of the time when discussing real estate with folks, I hear a common theme: “…when I sell my house I’d like to make $xxxx”, or “….I need to fix this and update that so I can make a profit when I sell my house”. In some instances, I guess those could be valid approaches. However, after living all across this country, big cities, small towns, good economies and bad, it has become obvious to me that you make money on a home purchase when you buy it properly. When I say properly, I mean you buy the right house, in the right neighborhood, for the right price–that’s why we do what we do here with our network of agents. If our clients get matched up with a good, honest, reputable agent, their likelihood of buying a home properly increases dramatically. Their risk is reduced dramatically. And three or four years later when it’s time to sell their home, their stress is significantly less because more likely than not they have a little room to play with financially.

Now, other than death and taxes, there are no guarantees in life–and that absolutely remains true with real estate. Yet it also remains true that there is no investment vehicle out there that can give you the leverage for your money like real estate can. For example…if you invest $20,000 in the stock market, you would own $20,000 of ABC stock. Your out-of-pocket cash would be $20,000. If that stock did great, say 10% annual increase, at the end of the year you would have a profit of $2,000. Now compare that with the purchase of a $200,000 property. For arguments sake, we’ll use a 95/5 conventional loan (5% down payment)–that means you’re investing only $10,000 to purchase the $200,000 property. If that property ONLY appreciated 4% annually, at the end of the year you would have made $8,000. At the end of the day, what do you have: a $20k investment to own $22,000 in stock or a $10k investment to own a $208,000 property?

And we haven’t even begun to talk about the tax benefits, depreciation, investment property opportunities, or any of the other benefits of owning real estate. So yes, we obviously are very “pro real estate”. Every day people are fretting over the horrible real estate markets around the country, and in some cases those folks are justified. Likely, they paid too much for their home when they bought it, or it was in a very volatile area, and they are “upside down”–that is they owe more on the property than it is worth. When we look at the real estate markets, we see tremendous opportunities…in almost all areas prices have dropped dramatically and interest rates are as low as you will probably ever see in your life! That doesn’t mean you should rush out and buy a $400K condo in South Beach or Las Vegas–it means you should talk with one of our network agents who are experts in the local real estate market. Explain to them what you’re looking for, what you would like to achieve with your home purchase, and let them do the leg work in helping you find a quality home that your family can live in comfortably with less risk and stress.