In South Bay Real Estate
are many ways to invest your money, and each has it's own
levels of risk and reward. Among one of the best investments
is in real estate. Whether the investment is in a single family
home, or a 12 unit apartment building, owning real estate
has a number of advantages, and often not the same levels
with any investing, investing in real estate takes a lot of
time, education, and, of course, risk. But the rewards can
be the difference between barely getting by and financial
are plenty of benefits in real estate...see also Buying your
first investment property in the South Bay.
Cash flow is the difference between your income and your expenses
on a piece of property. You can have a positive or negative
cash flow. Obviously, you'll feel a lot better if the cash
flow is positive.
on cash flow is this: Never use all of your positive cash
flow for rapid debt reduction. You will be walking a thin
line. By keeping a strong positive cash flow, you will have
more options and space to maneuver.
Appreciation is the increase in value of a property. There
are two kinds of appreciation. The first is from economic
conditions beyond your control, such as inflation.
kind is market appreciation, which you can control. When you
improve a property (through renovations), you force its value
higher. You can purchase a piece of property in need of repairs
and bring it back up to neighborhood standards or slightly
higher; this will give you a property that is much higher
in value. In addition, the South Bay has long been a very
strong real estate and investment market. The simple truth
is that there are only so many homes near the beach, and the
demand is generally high. The market tends to appreciate more,
and is less likely to drop in a down market.
Leverage is the ability to borrow a percentage of the value
of a piece of property. Real estate, in comparison to other
investments, offers a very high degree of leverage. In some
cases, a couple buying a single-family home can obtain 95%
financing. This allows individuals to purchase real estate
with little, if any, of their own money, and it is this ability
that allows the savvy investor to develop a real estate portfolio
by using the appreciation of one property as the down payment
With leverage, or the use of other people's money, comes a
repayment schedule. Your outstanding balance is reduced with
every payment you make. Part of each payment goes to interest
(applied first) and the rest goes to pay off the principal.
The principal reduction is called amortization -- reducing
debt. Hence, amortization can make you wealthy, slowly and
Owning real estate with the goal of making a profit allows
you to deduct interest payments and other expenses come tax
time. But don't be fooled into buying real estate for the
tax advantages; rather, purchase it because it makes economic
sense to do so.
Important Questions Every Investor Needs to Ask
Are you effectively managing your investment portfolio to
make the most of its potential?
are 7 good questions to ask:
can I maximize the equity I have gained in recent
years and leverage it into a much greater real estate
portfolio with greater cash flow?
can I reduce my investment risk factors by diversifying
my portfolio should the market adjust?
can I reduce the stress and time I spend managing my properties
without sacrificing income or growth potential?
can I minimize or defer the tax burden for myself and my
heirs, and still grow my asset base?
can I utilize the same strategies employed by large institutional
real estate investment firms?
I holding Title to my properties in a way to protect me
and my estate?
I utilizing the maximum amount of depreciation?
If you're not sure of the answers, please feel free to call.
As a real estate professional, I am here to provide you and
direction in these areas. In most situations, investment properties
amount to our most important and lucrative investments. Doesn't
it make sense to maximize their growth and potential?