What Is an Investor to Do

What Is an Investor to Do

What is an investor to do the in this era of zero interest rates (ZIRP) which have virtually killed the market for savers. Gone are the days of CDs and savings accounts that beat the combined costs of taxes and inflation. Today, even if you buy thirty year treasuries, a 3% return is about the best you can receive.  Should interest rates normalize, the risk to your capital is very high.  To make things worse for savers, the Federal Reserve has hinted at negative interest rates (NIRP) in which case you would have to pay the bank to store your money.

After last quarter; forget about the stock market, let’s consider why real estate Investing may be the best way for savers to invest.

1. You may purchase an investment property which is purchased strictly for the purpose of generating income. It’s neither your current primary residence nor a vacation home used only by your family. An investment property like an apartment or single residence is usually purchased with the intention of renting it out. Even in today’s inflated market, an investor can get a gross return of 5% maybe higher. That beats the banks.
2. The income from the investment property is partially tax sheltered by depreciation that gets written off against income. You get to keep more of the income from rents than you can from stock market dividends.
3. An investment property offers more than one opportunity for financial gain: in addition to income there may be appreciation that can result in a sizable profit when the property is sold.
4. You can enter the world of property investment with a relatively small amount of out-of-pocket money. In real estate you can use leverage to control more assets. In the stock market $30,000 can control $60,000 of stock. In real estate, the same $30,000 can control $150,000 or more of real estate. Leverage is important. A small increase in the value, over the years can will double your equity.
5. If you can raise rents over time, the investment property may be more valuable.
6. When it comes time to sell your investment property, real estate has a big advantage over the stock market. In the stock market a long term gain is taxed at 15 to 20% depending on your income. In real estate a capital gain is untaxed for the first $500,000 (a husband and wife each get a $250,000 exemption. Then there are 1031 exchanges in which you can sell a property and buy another of equal or greater value, and not pay taxes on the sale for many years later, if at all).
7. Many real estate investors offer opportunities for private investors to participate in real estate indirectly. The private investor can loan money to the real estate developer funding the purchase and the rehabilitation and receive a very high income (8-10%) and a participation in the profits if any. Or, there have been some recent innovations in crowdfunding where investors pool their capital and participate in a real estate project and are treated like the owners they are.

In conclusion, real estate offers “real returns,” returns that are positive after adjusting for taxes and inflation. There are also some innovative ways to purchase real estate. Some mortgage lenders are encouraged to loans with zero to 3% down payments. There is even a program called Section 203(k) insurance. It enables homebuyers and homeowners to finance both the purchase or refinancing of a house and the cost of its rehabilitation, through a single mortgage or to finance the rehabilitation of their existing home.

If you are looking for a return on your savings that is greater than the banks and maybe even grow your capital, real estate is the best way to do that. Should you have any questions on how to get started, whether with us or on your own, don’t hesitate to contact us.

Val Buys Houses LLC specializes in helping in helping “hands off” investors get great returns. All investments are backed by real estate (first lien position). The investment is made through an attorney, draws are only paid on completed work minus 10% to be paid once punch list is complete. Investors are listed as beneficiaries on Liability Insurance and are welcome to come inspect the project at any time of their choosing.

We care about our community in Cobb county and Atlanta. At Val Buys Houses LLC we take a lot of pride in providing excellent customer service. If you want a turn-key rental already rented out, a hands off investment, or a killer deal on a house to rehab yourself, look no further.

Give us a call today at 404-844-8845 and let us see if we can help YOU!