Team Will Help You Build Wealth
Investing is not the same as speculation; flipping a home or a rental in a rising market has proven successful for some, but it is risky. When done properly, real estate investing can be a great way to build wealth and
achieve financial freedom.
Buying real estate, whether your home or a rental, is a long-term investment and relatively easy to understand. Successful investing in real estate means you need to:
- Acquire (buy) the property that will make the most sense to you at the right price. Real estate is not a short-term (liquid) asset but a long term investment.
- Manage and maintain the property with care and attention to detail, make improvements as needed and rent to qualified reliable tenants.
- Understand the financial and tax aspects of real estate ownership and sales, whether a home owner or an investor. Your debt needs to be properly managed as part of your strategic plan.
- Dispose (sell) the property at the right price, using accurate pricing data, complete analysis and make improvements, as needed, for the market at the time.
The economic law of supply and demand applies to real estate and is easily observed. Hence the mantra “location, location, location.”
“Why should I hire Team, a full-service real estate company, to assist me with my real estate investments?”
Team is in a unique position to help our clients realize their real estate investment goals. Our asset management and Team approach means you will have a team of experienced professionals assisting you every step of the way, from acquisition, management through disposal. We understand investing in real estate because we are investors ourselves with a long track record of success. Team can help you:
- Plan your investment goals and strategy.
- Acquire the right property at the right price.
- Manage your property to maximize your returns.
- Dispose or exchange your asset. We have helped a number of clients defer income taxes through a 1031 exchange.
The power of financial leverage
When you buy real estate, how much do you invest? Mostly it’s your down payment. The beauty of real estate is that the money you put down grows exponentially because the house is worth so much more than what you have invested.
Home Ownership as an investment
One of the most basic and effective ways to invest in real estate is through homeownership.
- Mortgage interest and property tax deductions in most cases are tax deductible, lowering your tax liability and leaving more money in your pocket. These tax benefits added to the rent you now pay provide a guideline as to what you can afford in a mortgage.
- Lower interest rates and loan incentives encouraging home ownership provide lower down and monthly payments and better terms than investors receive.
- Income Tax avoidance from the sale of your personal residence allows up to $500,000 ($250,000 for an individual and $500,000 for a couple) of gain to be exempt from income tax.
Real estate investment terms
- Cost basis is what you paid for the property including all closing costs except operating expenses.
- Net Operating Income (NOI) is the income, rents received, less the operating expenses paid out. Operating expenses do not include interest or major improvements.
- CAP Rate (NOI/Sales price) is stated as a % and used to evaluate various real estate investment opportunities along with other factors. Market value is influenced heavily by NOI and CAP rate.
- Net Cash Flow is NOI less interest, project and other nonoperating expenses for a year.
- Loan to value ratio is expressed as a percentage: Debt divided by appraised value.
- Equity is the market value (reduced by cost of selling) less your debt. Return on equity is your net cash flow divided by your equity expressed as a percentage.
You can learn more about us at:
About Us, Our Team, Why Team and Contact Us pages on our site.