For you rental.
Buy and hold investment property called rentals.
Rentals are a great way to make long term income in real estate.
Instead of buying a fund, or in addition to buying a fund you can purchase real property that is attached or on top of land and rent and maintain the buildings and land to tenants for cash flow.
You have to budget about a 1% maintenance cost and if the property is a commercial piece of property you have to budget a 3% marketing expense to keep it going.
Some common costs for residential buildings or sfr detached residences include PITH (principal, interest, taxes, heating) for mortgage qualification. Because getting a property without cash often requires a mortgage. Unless you are a cash buyer — access motivated sellers here.
These properties are so good that they qualify as the best ways to get discount property across the world!
That is what you want. If you buy cheap you can profit long term from your rental.
Okay, back to PITH. PITH is used by mortgage brokers and banks to determine whether your GDSR is out-of-whack or too high.
The GDSR is your gross debt service ratio and tell the banks how many rentals you can own.
Some people and funds get away with owning 60 or more properties when individual banks and alternative lenders only allow 4 units; 4 doors for you to own.
Your investment property strategy should include scaling the number of doors that you own. Or really the amount of cash flow that you can get.
Scaling the amount of cash flow that you can get will probably help scaling getting more doors because banks will look at using the cash from the property to cover the loans that they give you to scale further.
I don’t know how funds scale to own billions of dollars in real estate when there are traditionally caps on how much property a bank will lend to property owners — They cap the number of doors.
Maybe you will have to become your own bank.
Somehow lending money and generating cash flow for investment properties.
Above I said that the focus would be on rentals.
But, you can have an investment property strategy for raw land and commercial buildings.
If you are looking for the most discounted sfrs in the United States I have those. Access motivated sellers.
Apparently in most markets — or a lot of markets the single family residence isn’t even profitable to invest in. In other words, meaning, it does not cash flow.
These ones that I link to are generally the hottest property on the market.
You can call the motivated sellers and strike up a deal following any of these strategies.
The way you get matched determines the niche that you are in.
If you are searching for raw land or commercial just say so and you will get matched with that neighborhood of investor.
They are all the Flock.
Commercial Buildings
Banks look at commercial buildings by how much cash flow they generate.
They are all kinds of formulas that are good to know but the most important is the cap rate (Net Operating Income / Asset Value).
That will tell you if you fairly paid or overpaid for the property.
Strategy for Detached SFRs
If you want to accumulate more properties then you have to buy those detached sfrs that cash flow $500 a month. $250 if you joint venture.
Owning 75 cash flowing doors allows you to buy 1 detached sfr a month.
You can pay all cash!
Strategy for Choosing a Market
With the advent of the internet.. you can invest in any market in the world. Access The Flock has the highest quality real estate listings.
I recommend subscribing to the email list and saying goodbye to daisy chains and tire kickers.
You will get some good appreciating property at discount in the hottest markets that you can add to your portfolio and maintain for the long term.
With Detached SFRs mostly you could do a rent to own.
Yesterday I talked about the Best Real Estate Investment Strategies.
A rent to own is a real estate strategy where you make more money for a few years while tenants save money to buy the property from you in a few years time.
The extra money that you make above rents for a few years is considered option money and can count towards the downpayment of the property — but is money in your pocket.
The rent to owns are riskier because you generally attract or have from lists of tenants that are losing their house initially or are in worse financial positions because of divorce and health problems and there are more problems that cause financial distress.
There is Fistfuls of Cash: 20 Creative Real Estate Investment Strategies if you would like to read more about 20 creative real estate investment strategies.
Don’t strive for losses.
Consider your time horizon and whether you want growth or cash flow — you want both.
If you are flipping, I mentioned yesterday, that you want to get a spread from cash buyers and motivated sellers as quickly as possible. Same thing for wholesaling.