Where’s Your Best Investment?

Where should you put your investment dollars today? Is
real estate a good vehicle or is something else better? Investing
falls into two basic investment types. You can invest in paper or
you can invest in real estate. Paper investments include just
about everything except real estate. Even bullion, rare coins,
and art work could be considered paper investments. I include
them in this category because, unlike real estate that has
regular cash flow, they are assets that have no regular cash
flow. You have to sell them in order to realize any return on
cash investment.

The major difference between investing in real estate or
any paper investment boils down to a fundamental principle:
leverage. Let’s say that you have $50,000 to invest. You can
read books, take a course, search the internet, talk to brokers
and do all the due diligence required to invest in a stock.

You find a stock you like and purchase it. You take
$50,000 and purchase the appropriate number of shares. If the
stock increases 10 percent in value over the course of a year,
you have a return of $5,000. Not a bad investment. You enjoy a
10-percent return on your cash investment.

Here’s the big difference in real estate in very simple
terms. You take that same $50,000 and you can purchase a
property with a value of $250,000. You purchase the property
and put 20 percent down ($50,000). You secure a loan for
$200,000 and find a tenant who will make your payment.

Assuming the same 10-percent appreciation in asset you would
enjoy a return of $25,000. In other words your return on cash
investment would be 50 percent rather than 10 percent.
This is what’s referred to as leverage. Interestingly, you
can actually do much better than 10 percent if you shop wisely.

If you find a motivated seller, you could possibly enjoy more
than a 100-percent return on your cash investment. You can
find a motivated seller who will now sell a $250,000 house for
$200,000. My company regularly makes offers of $.50 on the
dollar—using very little cash in the process. How’s that for
leverage?

Which 10-percent return would rather have? Remember
you can outsource property management and maintenance. I
do. If you build a good “Success Team,” it can help you find
good buys on property and loans with favorable terms. If you
build your team right, you can also learn ways to buy real estate
using little of your own cash making your investments virtually
risk free. On top of all that, you can qualify for some very
favorable tax incentives for investing in real estate, which will
lower your tax burden and you enjoy more spendable cash.

If you want to learn how to invest in real estate using
safe, sound investment strategies, you might want to contact me
and ask about my 10 week Basic Real Estate Investing. Your Road to
Riches?