Many would-be rental home investors waste years before getting started. Some of the reasons for that are: too busy, fear of the unknown, the all-too-known paralysis of over-analysis, and lack of information. Conversely, the notion that they might never have enough information or money, and need to spend more time researching and studying before they act. Exacerbating this phenomenon, many new investors make what we call “rookie” mistakes when they finally do get going.
The most typical rookie mistake is believing that low-quality homes in bad areas in lesser cities will provide better “cash flow” (foreigners like to call it “yield”). While cash flow may appear to be better ON PAPER for such lesser properties, life doesn’t happen on paper. In real life, these bad properties usually end up wasting even more years of the investor’s time (and also the investor’s money).
Get started on the right foot
There are ways to get started fast (and correctly). They are: buy the right type of property (s), get the right (type) of financing, and use the proper management. Using these simple steps, the new investor can get off to a good start regardless of how much time or knowledge they have.
Remote Control Retirement Riches
On my Public Television special titled “Remote Control Retirement Riches with Adiel Gorel”, which will be airing through the weekend and into early September on Public Television stations across the country (KQED-TV in the San Francisco Bay Area, for example) this coming weekend, August 24th and 25th, I cover these points. Of course, I cover many other important related topics as well.
In the package I have created to the people who pledge to help Public Television, I have included two newly-written books, an extensive video course complete with motion graphics, three booklets, a quiz and a newsletter. The package also comes with the DVD of the show, as many may miss the showtimes.
One of the booklets I have written Is called “Making it Happen”. It targets the exact barriers preventing an investor from getting started correctly. This booklet also contains a self-quiz defining your readiness.
This booklet, coupled with all the other extensive information, and the PBS Special itself, which hits the important points, should get anyone up an running in no time. I will also happily support any investor, as we have already changed the lives of thousands, and I believe in continuing to change lives for the better.
For a partial list of the Public Television stations’ showtimes, please click here.
reaction is to have money sit as cash (with close to zero yield). However when people are scared of stock markets, real estate and (especially) single family homes usually become more interesting as a safe hard asset which produces income, which we tell our clients at ICG as well.
There will be information for new investors and established investors on how to move forward powerfully. There will also be lenders to update us as to the ever-improving loan possibilities for investors (domestic and foreign), and lots of great Q&A and networking. The event is near the San Francisco Airport this Saturday, March 7th, from . You may also register by emailing us at firstname.lastname@example.org or call us at 415-927-7504.
As far as markets, there may not be large appreciation swings in most markets during 2016. In a funny way the ever-solid Texas is appreciating decently now, but people have some questions about its overall economy.
Oklahoma City with brand-new homes (under 50% of the property tax bite of Texas; it is poised to provide better cash flow on similar rents and home prices – which it has) is a very serious candidate for solid investments.
Happy New Year!:
You can talk to many borrowers who have taken 30-year fixed rate loans and after, say, 16 years, realized that although there are 14 years remaining to pay off the loan, the loan balance AND the payment seem very low relative to marketplace rents and prices. The remaining 14 years is almost meaningless, since in many cases (statistically and historically) the loan balance will be a small fraction of the home price and not very “meaningfu.” Just to get some perspective, most other countries on earth have loans that constantly adjust based on inflation. Both the payment and the balance track inflation all the time, usually with no yearly and lifetime caps as adjustable loans have in the U.S.
From a historical perspective, these are extremely low rates. Most experts think that in the future, mortgage rates will rise; from a historical perspective even 7% is considered a low rate. Thus, these days, you can “turbo boost” the great power of the never-changing-30-year fixed rate loan by also locking in these amazing rates which will never change. If in the following years interest rates indeed go up, you will feel quite good about having locked under-5% rates forever.
Some would say that the 15-year loan is also better since it has a better rate. True, the 15-year rate may be 0.25% or even 0.5% better than the 30-year rate. However, in my opinion this is not enough to justify the enormous loss in flexibility. In addition, having the loan for a longer time allows inflation to “erode” the loan even further. This last consideration greatly minimizes the argument some investors make that “…with a 30-year loan I pay hundreds of thousands of dollars more over the life of the loan.”
One factor missing here is that they neglect the TIME VALUE OF MONEY! These extra dollars paid in year 20, 22, 28 etc., are in fact extremely “cheap” dollars in the sense that their buying power is greatly lowered over time. If the value of these future dollars were to be calculated based on the PRESENT buying power of the dollar, some of the later payments may be worth mere pennies on the dollar.
In summary I recommend getting a 30-year loan and then choose how long to take to pay it (anywhere between zero and thirty years – you choose!).
Everyone mentioning this blog is invited to attend for free, with associates. Just email us at email@example.com to register, and in the subject line write, ‘Read your blog!’ Then give us your contact information. We will respond with a confirmation for your free entry. AND that is all. We hate spam as much as you do. See you there.