Monthly Archives: June 2010

June 22, 2010 · 8:07 am

Need To Rehad A Home You Are Purchasing?

This is just a brief message to remind you of the benefits of the 203(k) loan that’s available through FHA. Sorry real estate investors, it’s not for you. But if you are someone who is in the market to purchase a home but the home is going to need a lot of repairs and you are strapped for cash you may seriously want to consider a 203(k) loan.

Over the past year I’ve helped several people purchase homes using this program. There are some pretty heaving fees for using the 203(k) loan and a lot of hoops to jump through. But if you find a home for sale in the Kansas City area that would allow you to pay the fees, jump through the hoops and still be sitting on a very nice, large nest egg of equity when you were through would it be worth checking out?

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Filed under Financing Options

June 9, 2010 · 8:56 am

Cash Flow Before Taxes

Listen, people over complicate this. Cash Flow Before Taxes is simply all your income minus all your expenses. I mean ALL your expenses. That includes debt service. If you calculate that you make $13,400 in rental income and you have expenses (vacancy, advertising, utilities, taxes, insurance, debt service, property management, repairs, sinking fund, etc) of $15,240 then you have a negative cash flow of $1,840. That’s not good. The prospective rental property may not be one you are too excited about.

In today’s economy Cash Flow Before Taxes is a great determiner of whether you should buy/hold or not.

Remembering The 4 Benefits of Real Estate Investing

These last couple of years have been tough. What with real estate investment financing the way it is and all. Seems the majority of the investors that are still moving in the market, with me at least, are looking more at cash flow than long term growth. Cash flow is good. Cash flow may be king. But it’s certainly not the only benefit of owning and operating rental property in the Kansas City area.

There are 4 benefits when owning investment property.

Cash Flow Before Taxes
Principal Reduction
Tax Benefits/Savings
Appreciation

Appreciation? What? Am I kidding you?

Listen, the topic of appreciation is a whole other post. A rather lengthy one at that. But remember in the late ’90s when people spoke of the “new economy” and how it would never crash? Well, this too shall pass. And when the depreciation and the flat growth turns around (1 year? 10 years? 100?) we will once again have appreciation.

Last week we discussed what NOI (Net Operating Income) was and how it influenced many things about your investment property. Over the coming days we’ll discuss the 4 Benefits in more detail. But it’s not like there isn’t plenty to read already. This is my 33rd post regarding the 4 Benefits of real estate investing. You can just go to the Categories section of this blog to look up the other 32 postings I’ve done over the years. Or you can just click here: The 4 Benefits of Real Estate Investing.

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Filed under 4 Benefits of Real Estate Investing