6 REASONS to invest in real estate investment properties in Florida NOW
I invite you to take the next few minutes to learn the truth about the real estate market, how it compares to other asset-building methods, and why it’s such a lucrative form of investment. Many potential investors will say, ‘I need to get into the Florida investment property market,’ especially given the current stock market fluctuations and the HOT market for investment properties, but they just don’t know the facts about investing in property. of Orlando and how to use the sale and leaseback method of property management.
When was the last time your financial advisor or stockbroker tried to convince you that moving a portion of your assets into the Florida investment property market might be a good idea? Never, right? The ‘why’ is simple. They do not earn commissions when you buy investment properties in Florida. You’ve also probably never had an apples-to-apples comparison of Florida stocks versus investment properties like the one you’ll see here.
Reason 1:
Leverage: Banks will not normally lend money to buy stocks. However, banks will proudly compete to lend money to purchase Florida Investment Property. Your first question should be, ‘why is that’? It has to do with risk management, which we will talk about later. The fact that banks want to lend you money to buy Florida Investment Property creates a situation that we will call LEVERAGE.
Let’s say you have $10,000 to invest in some type of investment. If you choose to buy $10,000 worth of stock, you will have exactly $10,000 worth of stock. Very clear. However, suppose you choose to invest that $10,000 in investment property in Florida using a 90% mortgage (which in many cases can be as high as 95-100% of mortgages on the market today), you will own $100,000 in investment property. investment in Florida. If both investments appreciated by 10%, your actual gain on your shares would be $1,000, while your actual gain on Florida Investment Property would be $10,000. That equates to a 10% real return on investment vs. a 100% return on investment. That’s what we call leverage.
Leverage: Florida Real Estate Vs. Inventory
The traditional argument against investing in investment property in Florida (primarily from stockbrokers) has always been ‘I can average 10% of the stock with little effort, so why would I invest in investment property?’ in Orlando that only appreciates 6-7% per year?’ ? This point of view does not take into account leverage.
If you believe the above statement to be true and compare the REAL numbers, the stock investment earned 10% of the initial value of $10,000 (or $1,000) and the Orlando investment property investment earned 6% of the initial value of $100 000 (or $6000). That’s still a real return of 10% versus 60%. It’s not hard to see which investment provides a greater immediate return on investment. Also. These numbers don’t take into account any income from your property over the course of the year, or the substantial tax advantages of owning a property, which we’ll discuss later.
Reason 2:
Value – As we mentioned earlier, if you invest $10,000 in stock purchases, you own $10,000 worth of stock (a pretty obvious point). If you invest $10,000 in buying investment property in Orlando using 90% mortgage leverage, you own $100,000 in investment property in Orlando, right? Well, only if you paid retail for your property. Any savvy investor will tell you that there are great deals on Orlando Investment Property, you just have to find them.
What if you bought a $100,000 property that was worth $110,000 the day you bought it? Happens? The answer is yes, all the time. If you have your eyes open and are willing to ‘check the numbers’ for great deals, they are all around you. You may be wondering, why would someone sell a $110,000 property for $100,000?
Value: Earn money when you shop.
The reasons are endless why a quick sale is desired, but just to name a few: job relocation, divorce, an estate being settled, or perhaps a current appraisal of the property was simply not done prior to the sale. By “finding this deal” you have accomplished two things.
You have added $10,000 to your asset column in the form of equity.
It has created additional LEVERAGE for you as your property increases in value (6-10% gain on $110,000 is better than 6-10% gain on $100,000!) Remember, you make money at Orlando Investment Property when you buy, not when you sell
Reason 3:
Control: Let’s take our assumption one step further. When you buy your $10,000 worth of stock, what can you do to increase its value? If we follow the assumption above, you have invested $10,000 using a 90% mortgage to buy a $100,000 property 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 home?
It’s amazing what a cleanup, a little landscaping, and a paint job can do to increase a property’s value. Just a few hundred dollars well spent can result in huge gains in value on investment properties in Orlando. Your $110,000 property with a little effort could easily be worth $115,000, $120,000 or more practically overnight! Do you have to do any of this work yourself? Absolutely not! If you like to do that kind of thing, go for it, but if not, just hire and accept a slightly lower net profit.
Reason 4:
Superior Tax Position: The tax code in the United States is geared toward rewarding investors who make homes and other property available to the public. When you invest in stocks, you are taxed at some of the highest rates in the tax code. When you invest in investment property in Orlando, you put yourself in one of the best tax positions in the business world. Remember the wealthy who have substantial portions of their assets in Orlando Investment Property? Tax advantages are one of the main reasons this is true.
Continuing the example above, let’s say you completed your ‘deal’ with the $10,000 invested with a 90% mortgage to purchase the $100,000 property that was appraised at $110,000 (because you ‘found a good deal’), which you improved to say, $115,000 spending another $1000 on cleaning etc. Suppose a year passes and the Orlando investment property market grew by 6%, his property would now be worth $122,000. So far so good, right? If you’re like most people, you may want to spend 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 of payments (most of which are tax deductible) you still owe approximately $89,000. However, his property is now worth approximately $122,000. If I were to refinance at 90% one more time, I’d take out a new mortgage of about $110,000. This will leave you with approximately $21,000 in cash in your pocket. Now, the BIG question; Do you have to pay taxes on that money? Absolutely not! You have not sold the property or made a ‘capital gain’. You have simply borrowed money from yourself. You can do whatever you want with that money, free of any taxes. Obviously a good strategy could be to buy two more properties just like your first offer!
Also, we have not taken into account the fact that ALL of your interest payments on this property are tax deductible. Additionally, you can also depreciate the property itself and all of its contents for additional tax advantages if you choose to do so.
Let’s be fair and compare the tax position of the Orlando investment property with the stock scenario. Suppose your initial $10,000 stock investment grew by 10% in the first year, creating a profit of $1000, and you want to access it. If you withdraw it, you’ll pay 20-28% (or more) in capital gains taxes to access this money. This reduces your net profit to $800 (8% actual) or less, depending on your tax situation. Compare that to Orlando Investment Property and you’ll start to get the picture.
Reason 5:
Limit your exposure to risk
Risk Management: Remember when we said that banks would proudly compete to lend you money on investment properties in Orlando? The answer to ‘why’ is very simple. Low risk. Banks incur little to no risk when lending money on Orlando investment properties due to the steady and strong growth rate of the real estate market, as well as the fact that if you default on your payments, they will simply sell the property to someone else. . This is in direct contrast to the volatile stock market, which can fluctuate daily with sharp rises and falls in value. Also, banks realize that a property is going nowhere, while many investors know full well about .com and other types of businesses that were there yesterday and are gone today.
All of this is not to say that the Orlando investment property markets don’t dip from time to time, however, the dips are far less dramatic than those that can occur in the stock market, as evidenced by the banks’ willingness to lend property money.
Reason 6:
Protecting your peace of mind.
Finally, now that we understand the value of leverage and risk management, we realize that a 6% gain on investment property in Orlando is better than a 10% gain on stocks in real return on investment. by a wide margin (approximately 50%, not counting Consider several factors that can increase this number, such as tax advantages, property income, etc.) Owning a good, solid investment property in Orlando 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.