Home Design Trends

aaaEvery year home design trends come and go but it’s never too late to try something new. Update your décor and impress your friends (and yourself) at the same time, by including some of this year’s hottest design trends.

Pantone Colour of the Year

Year after year the iconic people at Pantone come up with their colour of the year, inspiring not only home décor trends but fashion and other design areas across the board as well. For 2014, the colour du jour is: Radiant Orchid, a gorgeous pinky purple-hue. An infusion of this beauty would be a welcome breath of colour anywhere—from kitchen to bedroom and every room in between.

Florals

Florals are holding strong and continuing to be on-trend this year, but they’re definitely growing in size. Now, pretty blooms, the bigger the better are a force to be reckoned with. What lovelier way to add some vibrant colour and bold patterns to your home than throw pillows, sheets or duvet covers with big bright florals. (Try to find some with radiant orchid for a double-dose of style.)

Blue & Blue

Black’s younger, lighter cousin grey has certainly had its heyday, but this is the year for something far more dramatic. Black walls are en vogue—think entire living and dining rooms–but if you’re not ready to go all in, try one accent wall or the always-in-style coupling with white. And when it comes to blue, think every shade–from lovely sky blue dishes displayed in your kitchen, to darker navy and white striped towels in your bathroom.

Vintage

Everything old is new again but the good news is mixing and matching is totally ok. A distressed old-trunk serving as a coffee table or impressive antique maps framed and hung on the walls, not only serve as beautiful, on-trend décor pieces, but add a lot of intrigue (and conversation starters) to the room.

Warm Metals

Especially in the kitchen. Seems grey isn’t only taking a backseat in the living room, but in the kitchen this year as well. Warmer bronzes, golds and black are replacing sleek chrome and stainless steel when it comes to lighting and cabinetry accents. And if you’re really looking to make a big splash, try some bronze sconces in the kitchen.

How to be a Millionaire with Real Estate

ooo1. Cash flow

Cash flow is the extra profit left over after all of the expenses have been paid on a property. For example, if my rental property produced $2,000 in income and my expenses came to $1,700, my cash flow would be $300 that month.

Now, I know a lot of you are saying, “Three hundred dollars is not going to make me a millionaire.”

Probably not. But remember, we are just talking about one of the wealth generators. There are still three more to go!

Additionally, that $300 might be from just one property. If I owned ten similar units with the same cash flow, that’s $3,000 per month. If I owned 100 units, that’s $30,000 per month. This cash flow can go a long way toward helping you quit your job — or helping you save for a future big purchase, or retire wealthier.

2. Appreciation

When I talk about appreciation, I am not referring to how much I like you (though I do appreciate you!). I’m referring to the natural rise in value that real estate experiences. For example, if you purchased a property for $200,000 ten years ago, and today that property is worth $300,000, the appreciation made you $100,000 richer!

Of course, appreciation doesn’t cause values to increase every year (consider 2007!). However, historically, real estate prices have appreciated over the long term. So, again, appreciation alone is not likely going to make you a millionaire, which is why I don’t recommend that people purchase bad deals hoping that appreciation bails of them out.

However, appreciation is combined with the other “members” of the wealth generation team, powerful stuff can happen.

3. The loan pay-down

When you purchase a rental property with a mortgage, each month you make a payment to the lender. That payment includes two parts: principal and interest. Interest is the profit for the lender, but the principal is money you are paying down the loan with.

For example, if you purchased a house five years ago for $100,000 and obtained a $80,000 mortgage (we’ll say it was a 30-year mortgage with a 5 percent fixed rate), today you would owe only $74,000. Ten years from now, you would owe only $65,000. This means that every year your equity increased (equity is the difference between what a property is worth and what is owed on it), you’d gain value, as long as the property value didn’t drop.

Of course, if you paid all-cash for a property and didn’t obtain a loan, you would forfeit this wealth generator. This is something only you can decide.

4. Tax benefits

Finally, the fourth wealth generator in real estate is the tax benefits the U.S. government gives to investors. These benefits are numerous and realized in several distinct parts of the real estate process.

For example:

  • Unlike most businesses, the government doesn’t look at cash flow or appreciation as self-employment income; thus no self-employment tax is typically due.
  • The income tax that is due is often offset entirely by a deduction known as depreciation.
  • Additionally, when you sell rental properties, the profit is taxed at the long-term capital gains rate, if at all.
  • You can often defer any tax using a 1031 exchange offered by the government as a way to trade up into bigger or better properties.

The bottom line: If you make $100,000 per year from your job, your mom earns $100,000 per year from a business she owns and I earn $100,000 per year from real estate, who do you think keeps more? That’s right, I do.

Why more Expensive to Owning a Home than Rent

tttThe sharp rise in home prices in 2013 caused two conflicting results: The return of positive home equity for hundreds of thousands of borrowers and considerably weaker affordability for an equally large pool of potential homebuyers.

While positive equity allows more borrowers to move, weaker affordability keeps them in place. So which will be the greater driver of housing this spring?

“There’s going to be a reality check in the spring in terms of realizing that what we saw in 2013 is not a real market,” said Daren Blomquist of RealtyTrac, a real estate sales and data website. “It’s a nice bounce-back market, but ultimately you need the biggest pool of potential homebuyers out there to be able to afford those homes.”

In an analysis of housing affordability, RealtyTrac found that the estimated monthly house payment for a median-priced, three-bedroom home purchased at the end of 2013 was a whopping 21 percent higher than it was at the end of 2012 in more than 300 U.S. counties. That includes mortgage, insurance, taxes, maintenance and the subtracted income tax benefit.

The rise is the result of higher home prices and higher mortgage rates. RealtyTrac used a 30-year fixed-rate mortgage with an interest rate of 4.46 percent and a 20 percent down payment. That is versus a 3.35 percent interest rate the previous year.

Some metro regions, especially in California and parts of Michigan, saw monthly house payments rise about 50 percent from a year ago.

“Home prices were boosted by cash buyers in 2013, and as the cash buyers move out of the market in 2014, the buyers left are not going to be able to afford the home prices as readily in some of these markets,” added Blomquist.

It will now take far higher incomes in these markets for potential buyers to afford a purchase. In Los Angeles County, for example, the minimum qualifying income needed to buy a median-priced home is now more than $95,000, compared with about $68,000 a year ago, according to RealtyTrac. Income growth in the U.S. has not been robust to say the least in these last few years.

While it is still cheaper to own than to rent in the vast majority of U.S. housing markets, the scales have tipped the other way in some major metros, like Seattle, Los Angeles, San Francisco, Chicago, Denver and Suffolk County, N.Y. (the Hamptons). The 29 counties where RealtyTrac found it more expensive to own than rent account for 20 percent of the population of the 325 counties it analyzed.

The good news, perhaps, is that home price growth is moderating. National home values rose just 0.2 percent from December to January, according to a new report from Zillow. That is the smallest monthly increase since May of 2012. This may be due to a rise in inventory. While real estate agents still report tight supply, Zillow says it saw an 11 percent jump in the number of homes listed on its site in January, on a seasonally adjusted basis.

“As the market shakes off a long winter and gears up for the spring season, we should see buyers gaining a bit more leverage this year than they’ve had in the past, with more choice and less competition,” said Zillow’s chief economist, Stan Humphries, in a release. “This slightly more balanced market is another step on the road back to normal, and will help offset the impact of rising mortgage rates and more expensive homes for buyers.”

US Mortgage

Fears in the European banking community last week created something of a tantrum in U.S. bond markets, driving yields down and taking mortgage rates along with them.

As a result, mortgage application volume rose 2.9 percent on seasonally adjusted basis for the week from the previous week, according to the Mortgage Bankers Association.

The volume gains were driven entirely by applications to refinance home loans, which rose 5 percent from the previous week, seasonally adjusted. Refinances are highly rate-sensitive, and even though rates have been hovering near record lows for months, the drop last week was clearly enough to get some borrowers off the fence and into a new loan.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.62 percent, the lowest level since July, from 3.66 percent, with points decreasing to 0.32 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio loans.

However, mortgage applications to purchase a home stalled, falling 0.1 percent for the week and dropping 14 percent from a year ago. That annual drop may have less to do with homebuying demand and more to do with new mortgage rules that went into effect a year ago.

“The mortgage industry is celebrating the one year anniversary of the TRID/KBYO regulatory implementation date this week,” said Michael Fratantoni, chief economist for the MBA. “Purchase application volume last week was almost 14 percent below the same week a year ago. That was the last week for mortgage applications to be covered by the prior disclosure regulations and as a result there was a spike in application activity.”

New regulations aside, homebuying has weakened due to the severe lack of homes for sale. An index measuring signed contracts for home sales fell in August for the third straight month, according to the National Association of Realtors. Tight supply is also pushing home prices higher faster and sidelining some buyers.

Affordability may weaken in coming months, as mortgage rates now seem poised to move higher. The average rate on the 30-year fixed mortgage jumped Tuesday on fears that the European Central Bank would taper its bond buying, which would trickle out to U.S. bond yields and the mortgage rates that follow those yields.

“It’s enough to bring the most prevalent conventional 30-year fixed quote back up to 3.5 percent (from 3.375 percent) on top tier scenarios. While that might now sound like a lot in and of itself, the risk is that it’s the beginning of bigger move that could take months to fully play out,” said Matthew Graham, chief operating officer of Mortgage News Daily.

Ideas to Update a Room

You don’t have to hire a decorator (or break the bank) to give a room a quick update with lots of impact. So whether you’re getting ready to sell, have just moved in or feel like a mini overhaul, these five tips will have you enjoying the room of your dreams in no time.

Change Your Fabrics

Replace your curtains, re-cover your throw pillows, buy a new rug, Any one of these easy fixes can make a big impact; but all three will completely change the entire room! And if it’s a bedroom you’re tired of, same rules apply: Replace the duvet cover, re-cover the headboard, and toss a few new pillows on the bed.

Freshen Up With Paint

Whether you tackle an entire room, or maybe an accent wall or two, a new coat of paint is probably the easiest way to change a room. From light and bright to dark and dramatic, paint can completely alter the mood.

Re-Organize A Bookshelf

Bookshelves are amazing; not only do they keep your books organized, but they can also serve as great focal pieces. Try colour-coding your books or arranging them in stacks instead of side-by-side. Remove an entire row of books and replace them with framed family photos or bright accent pieces. Sometimes all a room needs is a shift in thinking about it.

Update Your Art

Updating the art on your walls is a great way to showcase the family talent. Frame your daughter’s sketches from high school (no one will know it’s not a real Picasso) or your son’s first finger painting. Or grab a blank canvas and paint it a bright colour to hang in the kitchen (you don’t have to be a Fine Art grad to add some basic pops of colour!). And the best part of this approach is once you’ve bought the frames, the art can be rotated throughout the year at no extra cost.

Add An Accent

Is your bathroom feeling boring or your living room giving you the yawns? Pick bright, colourful wallpaper and add an accent wall! Paint stripes in your dining room, or buy a chandelier for your front hallway. Adding an impressive accent is a fun way to give the room some personality without a complete overhaul (of the room OR your bank account).

Billion Damage to Coastal Homes

About 11 million Floridians are in the path of Hurricane Matthew, which is now expected to come ashore as a deadly Category 4 storm.

Many of those people will evacuate their homes — as nearly 954,000 are at risk of major storm surge damage, according to CoreLogic. Those homes have a reconstruction value of just more than $189 billion. Add Georgia and South Carolina to the mix, and it rises to more than $200 billion.

This CoreLogic analysis measures the damage just from water. It does not assess additional damage from wind, which will be sustained in some areas at 125 mph. The worst of the damage will likely be where the storm makes direct landfall, which is now predicted to be Daytona Beach, Florida. Close to 97,000 homes with a reconstruction value of $19.4 billion are in danger of storm surge flooding.

The numbers are considerably higher today than they were when Hurricane Andrew hit in 1992.

Florida was the epicenter for the housing boom and bust in the early 2000s. Building permits, a strong measure of construction, were filed for more than 138,000 single-family homes in Florida’s east coast counties just from 2005 to 2008, according to John Burns Real Estate Consulting.

While home construction ground to a halt in 2009, it rebounded strongly afterward and permits for another 81,000 were filed through 2015. Thousands of condominium units went up as well, but those tend to be in towers that are less susceptible to storm surge damage.

While New Orleans spent billions of dollars upgrading its levy systems since Hurricane Katrina’s devastating blow, Florida has done little to safeguard its coast. Towers continue to rise right by Miami’s Biscayne Bay, and Floridians seem unfazed by potential storm damage.

“You have tremendous cost associated with any engineering to reduce the risk,” said Tom Jeffery, senior hazard scientist at CoreLogic. “This is the first big storm to come through in a long time. It’s hard to promote mitigation when you don’t see these storms come through frequently.”

Georgia will also take the brunt of the storm surge, but its coastline is a lot shorter, so fewer homes are at risk. At a Category 4 level, about 138,000 could see storm surge damage, with a reconstruction cost of approximately $30 billion.

The storm is now expected to weaken before it gets to South Carolina. At a Category 2 storm level, 124,000 homes are at risk of flood damage, with a collective reconstruction cost of $32.4 billion.

Horrifying Tales of Real Estate

Anything can happen when you’re out in the field, and we’ve heard horrifying tales of vacant properties where someone’s home, ghostly figures in listing photos, and ghastly encounters during home tours. Some practitioners have even figured out how to turn a haunted listing into marketing gold. We asked our followers on social media for a fresh round of their most frightening tales, and, boy, will they tingle your spine.

  • I had a first-time home buyer with a limited budget, and we found a small Cape Cod that was completely redone from top to bottom and being offered at an incredible price. This home showed like brand-new: new drywall, doors, windows, roof, carpeting, kitchen, and baths. My clients were so excited as they ran upstairs while I stayed on the first floor, critiquing the home and wondering why the sale price was so low. While standing in the dining room, I heard a woman’s voice in the kitchen say, “I’m in here.” Startled, I went to the kitchen to see who it was — and no one was there. The voice came again: “I’m in here.” I was so freaked out that I yelled for my clients to get ready to go. Of course, they wanted to make an offer so I pulled the seller’s property disclosure statement. Added onto the last page was a newspaper article that read: husband killed wife in the kitchen and lit the home on fire. I still get chills to this day — and, no, my clients decided not to make an offer! —Andrea Decker, SRES, Berkshire Hathaway HomeServices Fox & Roach, Coopersburg, Pa.
  • Several years ago, my client and I were doing a final walkthrough of a house before closing. My buyer had requested that the seller fix a fence in the backyard. It was winter, and the snow was about a foot deep. As we were walking outside toward the fence, my foot hit something hard under the snow. We started digging and saw a boot. Thinking it had just been thrown in the yard, we attempted to pick it up. Then out of the snow came a leg, and that freaked us out. A homeless person had wandered onto the property and froze to death. Police roped off the area, and the closing was delayed two weeks. The buyer still closed, though. —Garry Britton, Hunt Real Estate ERA, Rochester, N.Y.
  • A repeat buyer couple and I went to view a short sale listing. After I knocked on the door, it cracked open about a half an inch. I peaked inside, and it was pitch black. In the darkness, I heard a voice say, “Come in.” My buyers and I entered with our hands out in front of us because we couldn’t see anything. I asked, “Can I turn on some lights?” No reply. We turned a corner, where I found a light switch and turned it on. We were standing in the kitchen, where four or five people were sitting on couches in their pajamas, staring blankly ahead. There was also a deep freezer chest in the middle of the room and a hole in the floor. All of a sudden, two huge German shepherds pounced on a sliding door and started barking like crazy. My clients and I almost hit the ceiling, but the people sitting on the couches didn’t even flinch. They just sat staring straight ahead. I asked a question, and one of them kind of mumbled something. I thanked them for their time, and my clients and I quickly scooted out the door and into my car. We drove several miles before any of us spoke. Mrs. Buyer broke the silence by saying: “Did anyone else feel like we were about to become Sunday barbecue?” —Debbie Cullen, ABR, GRI, RE/MAX Realty Team, Cape Coral, Fla.

About The Buying and Bidding Process

With over a decade of investing in real estate under my belt, I’ve learned a few things about the buying and bidding process. Whether you are a first time buyer, looking for a bigger home, or downsizing, investing in real estate is a smart decision – but only if you do it wisely.  Bidding wars, unfortunately, may be here to stay, so here’s some advice that may help you to secure your next property.

  1. Crunch the Numbers
    One of the most important elements in the process of buying a home, particularly if you enter a bidding war, is getting pre-approved by your bank or mortgage company so you know exactly what you can carry – and how high you can go in your offer.
  2. Do your Homework
    Buying a property is the most expensive financial decision most people will ever make in their lifetime so spending time to research the neighbourhood is so critical. There is so much emphasis on house inspections, and there should be, but the same amount of care should also be spent checking out local schools, transportation links, parks, crime rates, medical offices, family activities, seniors programs, daycares and even future housing developments.
  3. Nail the Timing
    I try to get into properties on a Wednesday so I can put in an offer on Thursday and avoid the weekend open house competition –  or before they are on MLS. By beating out the weekend competition, I might not have to enter into a bidding war. There’s no law that states that you can’t make an offer before the official offer date and a good agent should send you properties as soon as they are available and preferably before they go public.
  4. Pick the Right Agent
    Having an agent who has your best interest in mind is key to winning a bidding war. Your job as a buyer is not to seal the deal, it’s your agent’s job and they need to know what your limit it is – and respect it. If your agent tries to up sell you on the price and encourage you to go beyond your budget, it’s time to find a new agent.
  5. Keep your offer clean
    Surprisingly, not everyone is after top dollar when it comes to selling their home. I’ve put in a lot successful offers that may not have been the highest, but they were the cleanest. A clean offer with pre-approved financing, especially in a multiple offer scenario, shows the seller that you are serious.  Conditional sales and offers that are contingent on financing just don’t fly when there are other offers on the table.

Real Estate Marketing must have a Mobiles

That’s Jeremy Wacksman, Chief Marketing Officer of Zillow Group, explaining the one-for-one overlap between real-estate marketing and mobile marketing. Like any good buzzword, “mobile-first” is applied to everything these days: e-commerce, retail, software, entrepreneurship and even finding lost pets (seriously).

So why should you listen to Wacksman? Because if you’re in real estate, there simply isn’t a bigger player than Zillow — period. And not just in terms of market share and online traffic. As Zillow CEO Spencer Rascoff recently told Jim Cramer, “More people now type the word ‘Zillow’ into Google than the words ‘real estate.’

As Wacksman explains: “More than two-thirds of our traffic comes from a mobile device and on weekends it’s more than 77 percent. In July, more than a half-billion homes were viewed on Zillow Mobile. That’s 270 homes per second.” In short, Jeremy concludes, “If you aren’t advertising on a platform that consumers are using to shop for real estate, you are missing a huge opportunity.”

Strong words. And that’s why I connected with Wacksman, along with six other real-estate and mobile marketing experts, to find out the real “mobile musts” for real estate.

1. Mobile design.

For the uninitiated, mobile design — also known as responsive design — means building web pages that automatically “respond” to the size of the device being used to view them. Commonly, this means resizing elements like text, images, buttons and navigation. However, it also can mean eliminating onsite content itself that can’t easily be viewed on mobile

“As a current, older-millennial renter who is also considering a home purchase in the next year or so, if a site is not mobile optimized, I don’t go back and use it. I spend the majority of my time on my phone and often use it as a second screen while watching TV.”

“Give me a big tap target, an easy inquiry form, and remember my information. If your site isn’t prepared for mobile users, you’ll lose them to sites that are.”

2. Mobile ads.

Unless you’re Zillow, pay-per-click ads are the bread and butter of driving traffic to your real-estate site. These ads come in many forms: Google AdWords, Facebook Ads or display networks on other sites. Why should you go mobile-first with your ads?

“In today’s world, mobile marketing should be the number-one focus not only of traffic but also of predictable conversions. If real-estate buyers and sellers aren’t getting localized ads with images and calls-to-action designed specifically for mobile — like an easily clickable phone number — then you’re left with a broken marketing engine.”

“What you see now are savvy agents embracing the Facebook Live video movement for home-tour promotion and grabbing potential leads en masse with ‘ads in apps’ campaigns.”

“Buying a home is not the same as buying a laptop, but the trend holds: People explore on smartphones, convert at their desktops and then cross back over. With your ads — and especially with your leads and sales funnels — you have to make crossing that divide easy. If you’ve invested in a mobile app like Zillow, onsite tools like LinkTexting.com can get visitors to download it, and then the transition is seamless.”

3. Mobile landing pages.

Landing pages are standalone web properties that exist for a single reason: to drive action. The goal of your real-estate landing page has to be glaringly obvious and ruthlessly singular. Pick one goal and one goal only. After that comes mobility.

“With both our company and our clients, nearly 60 percent of our leads are from mobile devices. Through optimization, we’ve learned to follow four rules. One, make your main CTA button no more than one ‘swipe’ down down the page so it pops up almost immediately. Two, add another CTA button at the bottom of your mobile landing pages too. People don’t want to scroll back up to find your opt-in form or phone number. Three, use big buttons. Thumbs are fat, so make them span the width of the device screen. Four, don’t wrap your phone number in an image. Ensure it’s clear, text based, and easy to ‘tap to call.’

The Reasons of Buy a Rental Property Before Year End

I realize it may be unrealistic to purchase a rental property in just a couple months before year-end. However, I want to get you thinking about this strategy and encourage you to start shopping now and make it a priority next year.

As entrepreneurs find success with their primary business ventures, many search for the proper investments for their profits. With that said, after reviewing thousands of clients’ situations and tax returns each year, I am convinced that more entrepreneurs should consider rental real estate as an important part of their portfolio.

Now, you may shrug off the concept of owning a rental property and having tenants, due to the time and skills it may take to manage a rental portfolio. But let me list a few reasons that may change your mind:

1. The use of leverage.

Real estate is one of the few investment vehicles where using the bank’s money couldn’t be easier. The ability to make a down payment, leverage your capital and thus increase your overall return on investment is incredible.

2. Tax deferred growth.

Buying rental property based on speculation of its value is a dangerous tactic since cash flow is the key. However, appreciation over the long run is certainly realistic and at the least, you should be considering a tax-deferred strategy. In the future, you may even consider a 1031 exchange, charitable trust or installment sale to lessen your tax liability further.

3. Tax-free cash flow.

It’s no secret that because of depreciation and mortgage interest deductions (if you leverage your capital), your cash flow should be tax-free. That’s right! The far majority of the time, an investor will never pay taxes on their cash flow and can wait for capital gains on the sale of the property in the future.

4. The tax write-offs against your other income.

Having a rental property affords investors with another incredible opportunity to convert personal expenses to potentially valid business deductions. Also, depending on your classification as an Active Investor or Real Estate Professional and your income level, there is a good chance that your rental property will give you an overage of tax deductions that you can use against your other income. With that said, this is something you will want to discuss with your tax professional before investing so that your expectations are realistic.

5. Rental real estate is a forced retirement plan.

Americans are terrible savers. We lack the self-discipline to put a monthly deposit into our IRA, SEP or 401k as small-business owners. However, buying a rental property is a significant commitment that you are required to commit to and maintain. You will always be grateful in the long run when you don’t give up on it and build future cash flow and wealth.

What is Clutter

When real estate pros talk to clients about decluttering their homes, they might not realize what they’re getting into. In fact, getting rid of stuff can be painful, even for those who aren’t hoarders or recent widows. It’s the normal, everyday resistance to purging our belongings that attracts Christy Diane Farr to the world of self-help writing and life coaching.

Identifies three types of things that people hold onto that stand in the way of living that dream. I think this list is especially helpful for Book Scan readers because if real estate pros can understand the reasons behind why their clients are holding onto stuff, it might help them more skillfully ease through this transition. And if nothing else, you might consider lending them Farr’s book, which is filled with funny asides and assignments created to help people “release” the stuff that’s holding them back.

1. Stuff that makes you feel crazy. Farr uses the example of food storage containers, which I find maddeningly familiar (who hasn’t yelled exasperatedly at the cupboard containing the tupperware at least once in their life?). She encourages readers to balance the functionality of any given item with the space that’s claimed by it. “The madness of trying to manage them far outweighs anything even remotely resembling the convenience that would be using them.”

2. Stuff that’s broken. I’m totally guilty of keeping things around with the intention of repair, but without actually doing anything about it. “If you’re not going to fix it, let it go. It’s either worth the time, money, and energy it takes to make it work, or it just isn’t. Free it, and free yourself.”

3. Stuff that makes you hang onto an unpleasant past. Farr deals with this a lot throughout the book, because she clearly recognizes the pain that comes with decluttering. “The stuff is locked into the feelings and the feelings are locked into the stuff. It doesn’t matter from which side we break the lock. What matters is that we break it,” she writes. “It works because dealing with our clutter is simply a willingness to, at long last, deal with ourselves.”

Why must Investing for Real Estate

Being a real estate investor isn’t always glamorous but it is one of the best ways to build wealth over the long-haul, especially for the entrepreneurial-minded. Here are six reasons why you should consider investing in rental properties.

1. Cash flow.

Many people invest in rental properties simply because of the cash flow – the extra money that is left after all the bills have been paid. The cash flow can provide ongoing, monthly income that is mostly passive, allowing you to spend your time building a business, traveling or reinvesting in more real estate.

Cash flow from real estate is stable and far more predictable than most other businesses. That’s great for entrepreneurs enduring the ups and downs of start-up life. The cash flow can help float you though the bad times and live well during the good times.

2. Tax benefits.

Let me ask you a quick question: if you earn $100,000 at your own business and I earn $100,000 through rental properties, who get’s to keep more?

That’s right: I do. Because the government rewards rental property owners.

Not only is the cash flow received from your rentals not subject to self-employment tax, the government offers tax benefits including depreciation and significantly lower tax-rates for long-term profits.

3. The loan pay down.

When you buy a rental property using a mortgage, your tenant is actually the one paying the mortgage payment, thus increasing your net worth each month. Because of the loan pay down a rental property is essentially a savings account that grows automatically, without you depositing money each month.

Today you might owe $200,000 on a rental property, but next year you might only owe $195,000 because the tenant is making the payment for you, making you $5,000 richer. Thirty years down the road, or whatever the term of your loan, it’s paid down to $0. You own a significant asset that you can sell or continue renting, all thanks to your tenant paying the mortgage.