Creating Wealth: Investing for Dummies
(First in a 4 Part Series)
San Diego is a great place to live and imany investors have had unsurpassed success in finding good tenants in San Diego. Rentals are in high demand in most every part of this county and you can be assured that "bread and butter" units will be at the forefront of desirable properties to buy or sell. I specialize in small to mid-sized investment properties and many of my clients are novices who have done extremely well by following my investment advice.Why do investors buy income property as opposed to stocks? What are the benefits of owning real estate?There are 3 main reasons people buy Real Estate.
Cash Flow, Tax Shelter/Depreciation, Appreciation
What is Cash Flow?
This is the cash left over at the end of the year when all debt, taxes and management fees have been paid. This is the money you can spend on vacations, a new car or that new kitchen you have always wanted. This takes into consideration the expenses of owning property but is not limited to: debt relief, property taxes,vacancy rate, insurance, utilities, maintenance, advertising, repairs and legal fees. Is cash flow a necessary component of a performing real estate asset? No it isn't. You may be wondering then why would I bother to invest all my money in an asset that produces no income? Glad that you asked! Depending upon your specific financial goals and earnings, cash flow may just be a burden for you. If you pay Uncle Sam 28% of every dollar you make, why would you want to earn more dollars? The key to building wealth is not by earning as much money as possible but by keeping as much money as possible. Why work harder to make more money if all you are going to do is fork it over to Uncle Sam? So defining cash flow as your primary (and only) investment objective is a short-sighted approach to real estate investing and you just might miss out on some "diamonds in the rough"....to say nothing of putting yourself in a financially disadvantageous position. There are some great investments that may even lose money before taxes the frst year or 2 or even longer!
Then what should you be looking for?
Stay tuned for part 2
Contact me for all things Real Estate
Deborah A. Stone, Realtor Integrity-Solutions-Results-
Hogue and Belong Realty-Bankers Hill
San Diego, CA
"Representing clients with the experience of an investor"
