6 REASONS for Investing in Florida Real Estate Investment character NOW
I invite you to take the next few minutes to learn the truth about the real estate market, how it compares to other methods of building assets and why it is such a lucrative form of investing. Many possible investors will say, ‘I need to get into the Florida Investment character market’, especially taking into account current stock market fluctuations and the HOT market for investment similarities, but simply don’t know the facts about Orlando character investing and how to use sale and leaseback method of character management.
When is the last time your financial advisor or stockbroker tried to convince you that moving a portion of your assets into the Florida Investment character market might be a good idea? Never Right? The ‘why’ is simple. They don’t earn commissions when you buy Florida Investment character. It is also likely that you have probably never had an ‘apples to apples’ comparison of stocks versus Florida Investment character quite like the one you will see here.
Leverage: edges will not typically loan money to buy stocks. edges will however, compete fiercely to loan money to buy Florida Investment character. Your first question should be, ‘why is that’? It has to do with risk management, which we will discuss later. The fact that edges want to loan you money to buy Florida Investment character creates a situation which we will call LEVERAGE.
Let’s assume that you have $10,000 to put into some kind of investment. If you choose to buy $10,000 worth of stocks, you will own exactly $10,000 worth of stocks. Pretty straight-forward. However, suppose you choose to invest that $10,000 into Florida Investment character using a 90% mortgage (which in many situations can go up to 95-100% mortgages in today’s market), you will own $100,000 worth of Florida Investment character. If both of your investments were to appreciate by 10%, your actual gain with your stocks would be $1000 where your actual gain with Florida Investment character would be $10,000. That equates to an actual 10% return on investment vs. a 100% return on investment. That’s what we call leverage.
Leverage: Florida Real Estate vs. Stocks
The traditional argument against Florida Investment character Investing (mainly from Stock Brokers) has always been ‘I can get an average of 10% from stocks with little effort so why would I invest in Orlando Investment character that only appreciates 6-7% per year’? This point-of-view is not taking leverage into account.
If you take the above statement to be true and compare the REAL numbers, the stock investment attained 10% of the initial $10,000 value (or $1000) and the Orlando Investment character investment attained 6% of the initial $100,000 value (or $6000). That is nevertheless an actual return of 10% versus 60%. It is not hard to see which investment provides a greater immediate return on investment. Additionally. these numbers do not take into account any income from your character during the time of the year, or the substantial tax advantages to owning character, which we will discuss later.
Value: As we mentioned before, if you invest $10,000 into purchasing stocks, you own $10,000 worth of stocks (a fairly obvious point). If you invest $10,000 into purchasing Orlando Investment character using the leverage of a 90% mortgage, you own $100,000 worth of Orlando Investment character right? Well, only if you paid retail for your character. Any savvy investor will tell you that there are excellent deals to be had in Orlando Investment character, you just have to find them.
What if you purchased a $100,000 character that happened to be worth $110,000 the day you bought it? Does it happen? The answer is yes, all the time. If you have your eyes open and are willing to ‘go by the numbers’ to find good deals, they are all around you. You may be asking yourself, why would anybody sell a $110,000 character for $100,000?
Value: Making money when you buy.
The reasons are endless as to why a quick sale is desired, but just to name a few: job relocation, divorce, an estate is being settled or maybe a current appraisal on the character simply wasn’t done prior to selling. By ‘finding this deal’ you have achieved two things.
You have additional $10,000 to your asset column in the form of equity.
You have produced additional LEVERAGE for yourself as the value of your character increases (a 6-10% gain on $110,000 is better than a 6-10% gain on $100,000!) Remember, you make money in Orlando Investment character when you buy, not when you sell.
Control: Let’s take our assumption one step further. When you buy your $10,000 worth of stocks, what can you do to increase its value? If we follow the past assumption, you have invested $10,000 using a 90% mortgage to buy a $100,000 character that has an actual value of $110,000 because you ‘found a good deal’. So what can you do to further increase the value of your new $110,000 character?
It is amazing what a cleanup, a little landscaping and a paint job can do to increase the value of a character. Only a few hundred dollars well spent can consequence in huge value gains in Orlando Investment character. Your $110,000 character with a little effort could easily be worth $115,000, $120,000 or more virtually overnight! Do you have to do any of this work yourself? Absolutely not! If you like to do that sort of thing then have at it, but if not, simply hire it done and accept a little lower net gain.
Superior Tax Position: The tax code in the United States is geared to reward Investors who make housing and other character obtainable to the population. When you invest in stocks, you are taxed at some of the highest rates in the tax code. When you invest in Orlando Investment character, you put yourself in one of the best tax locaiongs in the business world. Remember the wealthy that keep up substantial portions of their assets in Orlando Investment character? Tax advantages are one of the main reasons this is true.
Continuing with the above example, let’s say that you have completed your ‘deal’ with the $10,000 invested with a 90% mortgage to buy the $100,000 character that appraised for $110,000 (because you ‘found a good deal’), which you improved to say, $115,000 by spending another $1000 on cleanup etc. Assume that one year passes and the Orlando Investment character market grew by 6%, your character would now be worth $122,000. So far, so good right? If you are like most people, you may want to use some of your hard earned money.
Let’s do the numbers. You have a mortgage at current rates that started at $90,000 and after a year worth of payments (the majority of which are tax deductible) you nevertheless owe approximately $89,000. However, your character is now worth approximately $122,000. If you were to refinance at 90% once again, you would take out a new mortgage of approximately $110,000. This will leave you with approximately $21,000 in cash in your pocket. Now, the BIG question; do you have to pay tax on that money? Absolutely Not! You have not sold the character or realized a ‘capital gain’. You have simply borrowed money from yourself. You are able to do what you wish with that money, free from any tax whatsoever. clearly, a good strategy might be to buy two more similarities just like your first deal!
Also, we have not taken into account the fact that ALL of your interest payments on this character are tax deductible. In addition, you are also able to depreciate the character itself and all of its contents for additional tax advantages if you choose to do so.
Let’s be fair and compare the Orlando Investment character tax position with the stock scenario. Assume that the $10,000 initial stock investment grew by 10% in the first year, creating a gain of $1000 and you wish to access it. If you draw it out, you will pay from 20-28% (or higher) in capital gains tax in order to have access to this money. This reduces your net gain to $800 (actual 8%) or less, depending on your tax situation. Compare that to Orlando Investment character and you are beginning to get the picture.
Limit Your Exposure To Risk
Risk Management: Do you remember at the top when we said that edges would compete fiercely to loan you money on Orlando Investment character? The answer to the ‘why’ is very simple. Low Risk. edges incur little if any risk when loaning money on Orlando Investment character due to the steady, substantial growth rate of the character market, in addition as the fact that if you default on your payments they will simply sell the character to somebody else. This is in direct contrast to the volatile stock market, which can vary daily with sharp increases and decreases in value. Furthermore, edges realize that a character isn’t going anywhere, while many investors know all too well about .com and other types of companies that were there yesterday and gone today.
This is all not to say that Orlando Investment character markets don’t go down now and then, however the dips are much less emotional than that which can take place in the stock market, proven out by the edges’ willingness to loan money on character.
Protecting your peace of mind.
Finally, Now that we understand the value of leverage and risk management we realize that a 6% Orlando Investment character gain ‘beats the pants off’ a 10% stock gain in actual return on investment by a wide margin (approximately 50%, not taking into account several factors that can increase this number such as tax advantages, income on character etc.) Owning good, substantial Orlando Investment character allows you to sleep at night, or go on an extended vacation without worrying about your asset column. This is directly opposed to holding a substantial percentage of your assets in stocks.