Carolina Investment Property Blog

The Real Estate turn around-in some cities quicker than others (edit/delete)

The local economy directly affects the housing market. Land values increase as the value of production results of that land increases. This land value carries through to all land-including housing.  While the market seems to have crashed in many cities, some cities are expected to rebound very quickly.   

Some cities have overbuilt and will not see the turn around in the market for a couple of years.  This is not the same for all cities, however. A person’s buying power is directly related to their income. A stronger local economy equals stronger housing market.  According to FORBES and MSN Real Estate, here are the Top 5 cities where the local economy’s strength and growth are likely to cause a rise in home prices in the very near future: 

•1.)    Albuquerque, NM

•2.)    Charlotte, NC

•3.)    San Antonio, TX

•4.)    Portland, ORE

•5.)    Austin, TX 

Nice to see Charlotte consistently make the list of growth in local economy and housing!  The question is, will you take advantage of let opportunity pass you by?

1. Cash FlowCash flow is defined as the money that you have left over after you have received rent from a tenant and paid mortgages, taxes, and insurance. The tenant pays you rent, and that money pays off these items, known collectively as PITI (Principal, Interest, Taxes, and Insurance). Whatever is left over goes into your pocket……that is cash flow.

2. Depreciation

Though many people buy rental property for cash flow, the real benefits that will build your net worth lie elsewhere. The second main benefit of buying rental property is the tax shelter that it creates for you. The IRS allows you to depreciate investment property over 27.5 years. In other words, you can take this depreciation expense against your active income from your job.
For example:Let’s say that you buy a $100,000 rental property. The IRS lets you depreciate the building, not the land. Generally speaking, 85% of the purchase price is used to determine the building’s value. In this example, the IRS lets you depreciate $85,000 (the house) over 27.5 years. This is equal to $3,090 per year that you can take as a depreciation expense against your active income. If you make $80,000 in income from your job, you can subtract this $3,090, which gives you $76,910. This is the income that you pay tax on, $76,910, not $80,000 (which you actually made.) You can see how by buying this one rental property, you have reduced your taxable income significantly. If you buy two houses of the same value, this number doubles, three, triples, etc.

We hope you’re having a great week and appreciate your support.

Some advice on wholesaling. Have you ever driven down the street and seen all of those “we buy houses” or “1800BuyKwik” signs on the side of the road? Attached to telephone poles and stuck on stakes in some front yards? Well, often wholesalers may consider those the “competition”….well stop and think: many of those people want to BUY properties and so they may also be BUYERS for your investments, NOT competition. Keep their numbers and call them and see what their buying criteris is and keep a record of it for your next investment that you come across and need to find a buyer for.What about driving through town and seeing a property with a “Sheriff’s Eviction” sign on the front door AND a “For Rent” sign in the front yard? You might think oh well, it’s for rent and no big deal, well it could be eviction #3 in the last year and these owners are tied of being landlords and this might be the opportunity you have been looking for to secure a property at a great option price.

Best Investing to you!

Many times when I see new investors buy investment properties, I see some oversights that turn a positive deal into negative. One of these ways is by overpaying for the rehab of a property. I have a couple pieces of advice that I’ve picked up along the way in my investing and rehabbing here in the Charlotte NC Investment Market. I recently shared these during my speech to the Robert Kiyosaki-Russ Whitney Group and it reminded me to share them here:Carpet-CHEAP Carpet, Thickest Padding…again: CHEAP Carpet and the Thickest Padding. You will be amazed at what tenants can do to carpet in a short amount of time, it literally defies physics. The thicker your padding, the more it will absorb the “blows and weight” that your tenants will place on it and this will prolong your carpet AND MORE IMPORTANTLY prolong your wallet.

Paint-My advice here is to always use the same “model” and “paint number”. This is so that you can always go to ANY of your investments to paint, touchup, etc and never worry about “now what color do I have at 123 Main Street…is that where I have the off-white or is that where I have the yellow?” These questions don’t arise because you have the SAME paint in all your properties and this enables you to act quickly.

Well, good luck with these tips and with your investing. As always, please visit our site for more information: Www.CarolinaInvestmentProperty.com for more tips and properties and more.