The first rule of real estate is cash flow. Ideally you will buy low and sell high. That was a great rule that most used as an “investment strategy” until the music stopped in 06 and the world came to a major self realization in 2008. Our grandparents and parent grew up with the concept of housing values only going up. If you bought a house for $150,000 and held it for five years with an average appreciation rate of 4.57 percent, that house should go up in value $37,550. As long as you bought in a desired neighborhood real estate was a stable investment Investors all focused on the appreciation at resale. Everybody and their mother became flippers when the market was red hot and banks didn’t even care if you had a job to cover the mortgage.
Invest for cash flow
In 2008 the winners were the investors who were not over-leveraged paying interest only adjustable rate mortgages but those who had tenants paying down the debt servicing the property. Cash flow became king, multifamily became ideal to all investors from the everyday. Cash Flow is great for your retirement account, cash flow is great at supplement your income at the job you love, cash flow real estate is the GREATEST at providing the lifestyle you want and escaping the rat race.
Be a farmer not a hunter
There are many opportunities despite what you may read or what people who are afraid of the responsibility that comes with real estate or have analysis paralysis from just looking at deals and never diving in. There are even better opportunities in “our” communities. The best kind of opportunities if you ask me Value Add. We see the deferred maintenance and crime in the community that comes from absentee owners who sometimes only see the house in a picture from the email an agent sends them. In return neighborhoods with a high concentration of low income African Americans have tenants that don’t care because their landlords don’t care and the politicians don’t care because their constituent don’t pay property tax or donate to campaigns the way companies that like to exploit our communities.
Opportunity in affordable housing
With the need for Affordable Housing and prices being so low in these areas it is prime for investment to bring back vibrant communities. With most households earning under $50,000 affordable communities are needed now more than ever. It is nothing for a couple of people to get together and rehab some property for half the cost it would be in the hot neighborhood and cash flows twice as good.
When you know better you have to do better. Teaming with like minded people can’t great things done. The great thing we are focusing on is income producing cash flow property in areas in need of TLC. We have to reclaim our neighborhoods through ownership.
If you are interested in joining our Real estate investment Cub (Todd Acquisitions) please email us at email@example.com
Written by: Lance Pettway