The next Real Estate Get Rich Quick Plan – Rentals
It’s here the next great cycle in real estate. If you want to make some money in real estate then now is probably the time to think about getting in. I have been investing in real estate for nearly 20 years, and my family has been in the business for a lot longer than that. I have personally invested through several cycles and have seen many more.
It seems that the real estate market runs in cycles, about five to ten years. We just got through a big one where everything was going up. Homeownership in the U.S. has risen to nearly 70 percent. Now we are on the down side and we are already near homeownership levels of 1985. The time for rentals is back.
But what you will see is that most of the apartment buildings that sprung up during the last great rental period have converted to condos, and thus have started to experience foreclosure. Today we are facing a huge inventory of foreclosed properties, and all of the people that lived in those properties will be looking for places to live. Why not in your condo or home?
The next great real estate cycle is now at your feet. When is the best time to get into the real estate rental market? How about when interest rates are low and prices are even lower? Ah…..would that be now? I think so. Now what we have to do is get creative and we have to find out how to get into the market using leverage or better yet – cash. I personally have begun a life of living debt free, I simply believe that cash is king and credit will enslave you. However, with that said, leverage and finance have their place and you may not be able to run out and pay cash for your next rental property.
There is no question that buying bank-owned properties for cash will get you the best deals, but banks are now more motivated than ever before to get real estate they own off their books. They are motivated by their own business model and oversight by the federal government. So, these banks are more willing to loan you money now than ever before. Laugh out loud if you will but it is in their best interest to do so. You can get creative and work some pretty good deals out with them and they will be the bank. It is better for them to loan you the money on the house than to have the bank sit on it.
The way this cycle will work is that you can go out buy a house or a condo for dirt cheap prices – I mean 30 cents on the dollar. Remember that the real estate market will run in cycles (trends, if you will). On average a typical home in the U.S. will double in value every eight to ten years. And we saw that prior to the last pull back. If you bought or buy at the end of the cycle you can get hurt, so we buy our home now when prices are at an all time lows; we rent the home and start using the strategy in which we pay extra principal payments. With interest rates so low you should be able to have enough extra principal payments that will allow you to pay this home off in eight to ten years.
You are then sitting on a piece of property that is 100 percent cash flowing, even if the market pulls back again you will still have cash coming in with little overhead which will allow you to make the next cycle. But this is the best part, let’s say you buy a home for 50 cents on the dollar. Say a $200 thousand home that in today’s value is $100 thousand. Believe me, you can get them for far less today. Over the next 10 years you pay it off and the value of the home increases to nearly $400 thousand. But you own it free and clear; so let’s say you have another correction. It would have to go a long way down before it really starts to affect you because you own it free and clear. Even if it went back to 10 year lows you still have equity to pull out.
On a side note you can always get a mortgage or refinance later and pull cash out to invest tax free later. Although this is not a debt free type of mentality, there are circumstances when leveraging money will be to your advantage.
With all that said, keep looking for more articles from me on this subject as I am personally doing this. I love real estate as a way of diversification and now is the time to make your next fortune in real estate.
Happy investing,
James Dicks
