Sound Life Education

By Mike Fish, Founder of Sound Life Education

Presently, there are many types of avenues families and individuals can dive into to try and invest some money for future growth. Today, we have stocks, bonds, CD’s, annuities, high-yield savings accounts, and of course you’re everyday piggy bank or that special spot under the dresser! In fact, out of all of these avenues, that special spot under the dresser would be my choice in a market like the one we are currently experiencing, that is if real estate wasn’t around. Investing in real estate is my number one choice, and for that matter, my only choice, when it comes to building a highly successful portfolio that has the potential of retiring future generations in my family. Why is it that I pick real estate, especially considering what has been going on in the markets the last few years? The answer to that is very simple, it has more moneymaking options for me, 3 in particular.

I can purchase the property using other people money.

Saving me money off the bat, I can buy a home using money from; a conventional lender, like a bank; a hard money lender, whom only looks at the profitability of the home you are buying, and does not inspect any personal information or financials; I can do a lease option contract with a seller, promising him or her more income than just normal rent; I can do a trade out, which is when I have a property, and if the seller agrees, we can trade our properties out right and call it good.

I can have rental income and equity growth.

Say I purchase a home using hard money for $80,000, with me putting down 25% of that, roughly $20,000 (A hard money note is usually higher in cost when it comes to interest rates, so a goal for me is to get conventional financing in six months or so.) I have a hard money payment of $900.00 a month, not to mention utilities, taxes and insurance. What I would do then, is rent this home out for $1,100.00 a month, which now I am not paying any utilities, and the extra $200.00 goes toward insurance and taxes. After six months, (Remember, I am not paying for anything now that it is rented), I go to my lender and get a cash out refinance. I always buy homes under appraisal value, so lets say at this six-month point my home is actually worth $130,000. A cash out refi at 80% would give me a loan of $104,000, which your payment would be around $800.00 a month, which your tenant is still paying, and I would have paid the lender back his or her $60,000 and I would pocket my down payment of $20,000, plus another $24,000, and still own the home and have it paid for! Imagine if I did this 10 times a year!

Tax savings

Because I am providing public housing to families, the government gives us investors tax benefits and write-off’s that will make your head spin! You can write off expenses such as: car, office, home, damages, trips, meals, clothing, supplies, etc… Contact a Certified Public Accountant for more details.

I love investing in real estate because of my income potential, but the most important aspect of all of this is that fact that we are putting families into homes, and then helping them through the buying process for them to become the actual homeowner. Always use the pay-it-forward program in everything that you do, and the money will always come!

See you at the top!