Retire On Income

Any decisions people make, if they are following a plan, are better than decisions left unmade.

The best time to plant a tree was 20 years ago, but the second-best time is today.

Land tends to solely be an appreciation opportunity, and investing solely on the hope of appreciation is akin to gambling

True value lies beyond today’s rent roll. Better quality locations represent more durable income streams since it will always be easier to replace tenants

Unlike stocks where you are a passive investor, you can actually influence the value of the real estate you own. For example, you can do a gut rehab of the property and increase its value significantly.

Vacate vacation homes. Just because you can kick back at a recreational abode doesn’t mean profits will recreate themselves. Vacation homes are nothing more than a whimsical retreat and a low-tier income option, says Kurt Westfield, managing director of WC Equity Group, based in Tampa, Florida. Seasonally, they do have the capacity to generate decent returns, but the vacancy and holding costs coupled with typically premium pricing tend to equate to a less-than-stellar rate of return.

Turnkey properties can unlock returns. With a turnkey investment, you’re buying a fully vetted, redeveloped property with tenants and a property manager. It’s a lot like buying a take-and-bake pizza. All the ingredients are there, and all you have to do is buy.

Some people buy real estate expecting it to appreciate a lot over time, says David Reiss, a professor of law and research director of the Center for Urban Business Entrepreneurship at Brooklyn Law School. But it can be risky or even foolish to pay so much for a property that you’re losing money on an operating basis just because you think it will appreciate.

Principal Recapture If you own a personal residence, you probably know that your mortgage payments include a principal portion and an interest portion. The principal portion is the amount of money that was borrowed and is still owed to the lender. One benefit of being a real estate investor is that the rental income collected from the tenant is used to pay down the mortgage, including the principal, month after month and year after year. That’s right, you own the property and someone else pays the mortgage! This is why it’s important to build relationships with tenants and treat them like clients!

Cash Flow Cash flow is usually calculated by adding the rental income from all sources followed by subtracting the expenses and mortgage payments. If there is money left over at the end of the month after all expenses and mortgage payments have been made, the investor is in a positive cash flow situation. When the property isn’t producing enough income to cover all of the expenses including mortgage payments, the investor is in a negative cash flow position. Needless to say, ...investors aim to buy positive cash flowing properties or properties where cash flow can be increased in the near term. The benefits of owning a property with positive cash flow is that the investor can spend the money any way he or she chooses. That said, I know many investors who re-invest the extra money back into their properties by topping up their reserve funds or by performing renovations that increase the value of the property. It’s also important to know that when a market or home prices experience a downturn, the investment is buffered by the cash flow that is still coming in. See more

A report by the U.S. Census Bureau showed that overall homeownership has been declining in the U.S., with 64% of households owner-occupied in the fourth quarter of 2014. That compared with 67.5% at the end of 2008.

Millennials are citing a lack of a down payment, the level of college debt, the postponement of marriage and the desire for job mobility as reasons that more young adults are looking for apartments instead of starter houses

Myth No. 5: You should avoid risk at all costs. We all know the correlation between risk and reward. Risk, like conflict, is not inherently a bad thing. We may associate it with negative emotions -- uneasiness, anxiety and worry -- but it's not bad. Without risk, there's no reward. We have to be willing to weigh the pros and cons of any endeavor and be willing to accept and embrace risk if we are to find great success investing in real estate. I love risk -- when it is properly calculated and weighted against my full portfolio. The difference between me today as an experienced investor and years ago as a new investor is I understand how risk plays into my portfolio, and I no longer take unnecessary risks. Simply calculated and well thought out!