You won't get rich quick buying Single Family Homes for Profit but you will get rich. It is just a matter of time. There is an old saying about planting trees. “The best time to plant a tree is 20 years ago and today.” The same holds true for buying houses. Buy one or more this year and you will be VERY glad you did in the future. Let's see why.
Every investment must be considered not only for its rate of return capabilities, but its long-term viability as it relates to the owner's personality, talents, capital ability and management expertise. While it is true that the owner can hire out the management of his real estate investment properties and avoid the day-to-day headaches, his best return will result from self-management. It has been said that if you hire out management of your real estate investments, you should be prepared to lose 30% of your cash flow. First, you will lose 10% to the management fee. Second, you will lose 10% to mismanagement (no one will look after your property like you will!). Third you'll lose 10% to theft.
So, what is the ideal investment vehicle to own long-term, self manage, and has its value determined by emotion (not gross rent multipliers, net operating income, or internal rates of return)?
Single family homes are the IDEAL investment because they provide:
- Income (from rents)
- Depreciation (paper write offs to save you money on your taxes)
- Equity (your tenants pay your loan off for you)
- Appreciation (the average house in America has increased in value over 6% per year for the last 30 years!)
- Leverage (unlike stocks you can buy houses with very little of your own money).
Here are some more reasons why you should buy Single Family Homes for Profit:
- You buy & sell houses from owners NOT investors.
- SFH's appreciate faster & more consistently than standard investments-demand and emotion drive prices up, not rental income.
- SFH's are easier to sell (when you need cash) & finance or refinance.
- If you make a mistake-it's not as devastating as if you had bought a million $ apartment building.
- Safety of investment—SFH's spread risk, unlike apartments
- You can exchange tax free unlike stocks that you pay capital gains on before reinvesting your proceeds.
- The principle of converting ordinary income into capital gains. (If you take ordinary income that has been sheltered from taxes with depreciation, then subsequently sell the property you will pay capital gains-as low as 8%– not ordinary income tax rates. You can become rich learning how not to pay taxes over your lifetime and investing the savings in SFH's)
- Ease of management (would you rather manage 100 SFH's or 100 apartment units?)
- Note; you don't have to start investing at a young age to make money in SFH's. No matter what your age you can begin making profits from SFH's immediately. Buying houses “right” will produce immediate results and long term security for you and your family.
There are hundreds of reasons to buy, sell, hold, rehab and lease-option houses for profit. Future articles at this website will address these opportunities in detail.