Jim Ingersoll talks to us today about a few reasons why it’s smart to invest in single family properties as a real estate investor.
There are some excellent tax benefits you’re eligible for when you invest in single family properties, including depreciation as Jim tells us. Visit http://bigmoneyinvestor.com/flipnerd/ to get your free Flipping Houses Swipe File.
Mike: Welcome back to the FlipNerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Jimmy: Hey, everybody, I’m Jim Ingersoll with the REI Classroom and I’m excited to be here with you today. I want to talk about why you want to invest in single family homes.
Mike: This REI Classroom real estate lesson is sponsored by FlipNerd Investor Coaching, your blueprint to investing success.
Jim: I’ve got a lot of investor friends that love to invest in all the real estate asset classes from mobile homes and parks, mobile homes park themselves. It could be self-storage, commercial duplexes, quads, multifamily. It’s all good. But I want to make the case today for three reasons you really want to zero-in your focus on single family homes.
Now number one is leverage. And this goes really for all real estate investing. But real estate investing has more leverage capability than any of the other types of investing that are out there. Because think about it, you can control a huge real estate asset with a very small down payment, or if you learn to use creative real estate, no payment at all. Wouldn’t you love to control some buildings that produce cash flow on a monthly basis where you don’t invest any of your own money, so that your return is actually infinite?
But even if you’ve got to go out and get a bank mortgage and put 20% down on $100,000 deal, you’re going to get the benefits of owning a $100,000 asset for as little as $20,000 down. And if you’re really a dynamite investor, you’re going to put zero down. It’s even better.
Now the other thing is, the other part you can leverage right now is the phenomenally low interest rates. If you’ve got the ability to go out there and lock up 3%, 4%, 5% rates, you’re going to cash flow like crazy on these buy-and-holds and you’re going to do really, really well. So I highly recommend you also leverage today’s historically low interest rates. It can change your life for over a number of years.
Now let’s talk a little bit about reason number two which is growth. First of all, as real estate investors, we are taught to . . . The golden rule of real estate is what, is you make money the day you buy the house. So you’ve got a built-in margin in that house. You can’t do that with gold and with stocks and with other stuff. You can’t go to the Dow and say, “I’m going to buy Apple at 20% off today.” You can’t do that. You can do it as a real estate investor buying real estate assets. So you’re back [inaudible 00:02:35] day one. And in today’s market, the prices are going up. It’s hard to say if they’re going to keep going up forever, but right now, over the last couple of years, the prices have been going up very, very nicely, so you get appreciation.
And then as you pay down your bank loans, you can also get the benefits of amortization. So every month, the value of your house goes up a little, and the amount you owe goes down a little bit, creating more equity spread. That’s how you’re going to juice up your net worth. It works very, very well. Appreciation amortization are very, very powerful. And you should also look at ways you can pay off your loans in half the time. It’s very, very easily done.
Now, the last benefit I want to talk about, number three, is taxes. And every April, I am so appreciative of this thing called depreciation. I take all of my rental properties and we depreciate over 27.5 years. Phenomenal, phenomenal tool that’s going to save you a bundle in taxes. Now, also because real estate investing and being a landlord is a passive income, you’ll also avoid the self-employment tax because it’s passive and you get to write-off all of that mortgage interest that you hate paying anyways.
Think about it. You can write-off your mortgage interest, your expenses, your depreciation, and you get to avoid self-employment tax. Those are three great tax reasons. You also get all of the growth of being in single family homes and you get to leverage phenomenal rates and great deals on real estate today.
I’m Jim Ingersoll with the REI Classroom. I’ve got a free gift for you today. I hope you take advantage of it. Go to bigmoneyinvestor.com/fixed-flip, pick up your contractor swipe file right now and get out there and start rehabbing some houses and making some great deals.
Mike: The FlipNerd Investor Coaching Program is America’s most robust real estate investor training and designed for your success. If you’re ready to roll up your sleeves, ready to take personal responsibility for your own success, and ready to dive in to a world-class instructional coaching program that provides you step by step instruction to help you achieve financial freedom, then you need to visit flipnerd.com/coaching to learn more. Spaces are limited. Whether your goal is to simply get started or to take your business to the next level, you may be a fit for our life changing program. Learn more today at flipnerd.com/coaching.
Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of Flipnerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investments or tax decisions, as real estate investing can be risky.
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