Friday, May 31st, 2013 by adminHello All!
As the Dow dropped more than 350 points today I can’t help but wonder why people even bother with the stock market anymore. I use to do ok buying stock options- mostly with rising companies in emerging markets- some deals went well and some didn’t but why I really stopped investing in stocks is because of the lack of control. Unless you are a really big player in the stock market (I’m talking hedge funds) you are at the mercy of so many different variables beyond your control- why bother!
This is why I love real estate so much. Having the proper training and experience will enable you to have control over your investments.
You might be saying “real estate is risky look at the big decline in the USA and all the people that lost their homes”
My response to that would be yes, real estate can be risky if you do not know what you are doing. You see, the rise and decline in real estate prices follows a pattern or cycle that consistently repeats itself throughout history. If you can learn to identify where a particular market is in a real estate cycle you will know whether you should be buying, holding or selling.
Let’s give you an example:
It’s the perfect time to be buying and holding property for cash flow in Phoenix. What is cash flow?
To determine your cash flow for a particular property you take the rent your tenant is paying you and subtract your expenses (vacancy allowance, taxes, management fees etc). What you are left with after you subtract the expenses from the rent you collected is called cash flow.
The goal in real estate is to build up a portfolio that creates enough cash flow on a monthly basis so that it covers all of your expenses and your lifestyle. The cash flow comes in reliably every month, month after month with little or no effort needed by you. You put a good property management company in place that deals with the tenants and fills your property when it is vacant.
Let’s give you a real life example:
Just last week I purchased an approved short sale in Phoenix for $60,000. It’s a 3 bed 2 bath with a two car garage. The property cash flows (money in my pocket) $582 every single month for as long as I own the property. This is 10.7% cash on cash return (or about 6x what a GIC or the banks will pay you!).
You will not find these kind of deals online or on an MLS system. Using our contacts, we snap up these deals long before the average investor has a chance to buy them. Last week two such deals came across my desk and both were sold to two of my investors within 1 hour! They go very fast!!
I just hope that all the negative news about the real estate market continues so I can keep buying as much real estate as possible. Once CNN starts reporting that things are looking bright in the American real estate market all of the amateur investors will be bowling over each other trying to get into the market. This is when I know things have turned and I will quietly exit the market.
My mentor (who has done over 1,000 deals and has a portfolio that produces enough cash flow every month so that he never needs to work again) has just arrived in Calgary from a prolonged trip in the USA. He’s a tough guy to pin down as he is always on the move looking for the best real estate deals in the USA but I’m going to try to sit him down for long enough to hold a webinar on buying cash flowing deals in America this week! I will send out invitations to the webinar shortly which will be limited to 50 people.
Have a great week everyone and thank you for reading!
Stephen Preston
CFO Tax Lien Training Inc.