Posts Tagged ‘There’s No Free Lunch in Real Estate’

Speaking at Real Estate Investment Club of LA

Tuesday, January 19th, 2010

Jon will be speaking the state of the real estate investment market at the Real Estate Investment Club of Los Angeles on February 20th, 2010 at 10:00 AM. For more information, visit http://www.realestateclubla.com/.

Three Reasons to Invest in Real Estate

Tuesday, January 19th, 2010

Lately I’ve been asked if now is a good time to invest, and my answer is always the same – YES! Now you might be saying to yourself that this sounds like optimistic broker speak, but it’s not. The reality is that we’re in the midst of a perfect storm and there are 3 great reasons that both you should be investing in income property right now. Click here to learn more about investing in real estate.

  1. Cheap Debt – interest rates are still at historic lows and you can get a 30 year fixed, non-owner occupied investment loan on a 3-4 unit property in the 6.0% range. That is fantastically cheap money.
  2. Low Prices – prices in most areas have fallen back to 2001 and below levels making this a great time to buy. You know the old adage, ‘buy low…sell high’.
  3. Inflation – with our federal deficit growing and over $1.2 trillion of new money recently printed, most experts agree we’re about to go into a period of significant inflation. And while this isn’t great as a consumer, as a property owner you like it for two reasons: first, you’re repaying your debt with deflated dollars and second, your rental income will increase meaning your passive income will increase as well.

For many new investors the largest impediment to success is fear and an inability to get financing. The first obstacle can be overcome through education and by working with a knowledgeable real estate professional. That is where the information on this site comes in. The second can be addressed by speaking with your mortgage broker and making sure you qualify for today’s cheap debt.

So act now. Today’s low prices and great financing, coupled with tomorrow’s inflation, will be the foundation of your future wealth.

The Value of Property Management

Tuesday, October 6th, 2009

By Jon Swire

In this “Vlog” I explain the value of becoming a property investor not a land lord. I also discuss the benefits of hiring a 3rd party manager that is best suited to handle your assets, in addition to furthering your knowledge about the area. My goal is to teach you to bridge the gap between being an investor not a land lord, allowing you up to gain optimal profits from you properties instead of dealing with tenants and trash.

If you want to learn more, please watch my free online webinar titled “Investors vs. Landlords”

Finding a Real Estate Agent

Monday, May 11th, 2009

By Jon Swire

Are you ready to make your first income property purchase and not sure how to find an agent or what to expect? If so, you’ll want to read my tips on choosing the right agent for you!

If you’ve been thinking about investing in real estate, now is a great time. Interest rates are at historic lows, and prices around the country have fallen to 2002 levels in many places. The questions is how do you find a Real Estate agent, and what should you expect?

First, a great place to find an agent is through referrals. Either from friends, colleagues or other professionals, someone who has worked with the person in the past and can vouch for their integrity and responsiveness. After all, this person will be representing you in one of the biggest investments of your life, so you’ll want to make sure they are trustworthy and put your interests first. Another great option is to visit local Open Houses in your area, and speak with the agents working them. This will give you a feel of how busy they are based on the number of homes they have listed for sale, and it will also give you a chance to speak with the agent in an informal setting to find out how knowledgeable and personable they are.

Once you’ve identified a potential candidate, you’ll want to interview them either in person or on the phone. Ask them how long they’ve been in the business, what type of product they specialize in – SFR’s or income property – what areas they work and for the names of 2-3 satisfied clients you can speak with. And remember, first impressions go along way. Make sure they are on time and have strong follow up. After all, if they can’t get it right with you, how well will they do representing you to another agent?

Once you’ve selected an agent, you’ll want to give him clear parameters of what you’re looking for. Is this your first investment? How much do you have to invest? How far from your home are you willing to consider? And of course, what is a comfortable price range for you?

And remember, Real Estate is like most other service businesses, where the old adage holds true….”20% of the agents do 80% of the business”. So spend time before get you started finding the right agent for you.

Please visit http://theresnofreelunchinrealestate.com/ for more information, tips, and services.

1031 Exchanges & Cash–Out Refis: How to Explode Your Wealth

Thursday, April 30th, 2009

By Jon Swire

Have you started investing in real estate and aren’t sure how to take the next step to grow your portfolio? If so, you’re going to want to read my tips on how to use 1031 Exchanges and Cash-Out Refis to Explode Your Wealth.

Now that you’ve taken the first step and started investing in real estate, the next step is to learn the basics of 1031 Exchanges and Cash-Out Refinances so you can use these tools to explode your wealth. By using each of these where appropriate, you’ll be able to grow your real estate portfolio and passive income stream, without paying any taxes. The key is to take advantage of each in the right situation.

Cash-Out Refis are used when you own a property that has appreciated in value, and therefore so has your equity. Under current tax guidelines you’re allowed to do a cash out refi and do whatever you’d like with the proceeds, tax free. So, you can take the money and use it to purchase another property, thereby increasing the size of your portfolio and your passive income stream. You’ll go from owning 1 property to 2, and having two income streams instead of one.

Like Cash Out Refis, you’re going to consider doing a 1031 Exchange once your property has appreciated in value and your equity has increased. 1031 Exchanges allow you to sell a property and defer taxes until sometime in the future. You can then use those funds that would have gone towards taxes to purchase another larger property that generates an even larger cash flow stream than the one you sold. You can do this over and over throughout your investing career, and I have clients who have been doing this for 30 years or more. Remember, there are time constraints placed on 1031 Exchanges that you must meet, and you should discuss these with your accountant and real estate professional.

Cash-Out Refis are best used in situations where the property you own is one you’d like to keep. Maybe it’s in a good location, has a solid tenant base, or has excellent prospects for future appreciation. 1031 Exchange’s on the other hand, are best used when you’re ready to sell a property and move on. This typically occurs for any number of reasons: you’ve exhausted your depreciation, the building is older and has higher maintenance costs, the area is declining or the tenant base is troublesome, meaning it’s difficult to collect the rent on time each month.

Make sure you analyze your real estate holdings at least once per year to figure out if its time to do a Cash Out Refi or 1031 Exchange. The key to exploding your wealth and climbing the Property Ladder is to keep your equity moving and continually increasing your real estate holdings and the size of your passive income stream. Remember; before you make any financial moves you should always consult your Accountant or Tax Professional to fully understand the implications of what you’re planning.

Buying Your First Investment Property

Tuesday, April 7th, 2009

By Jon Swire

Are you finally ready to take the plunge and buy your first investment property? Have you finally saved enough money to start investing in real estate, but don’t know where to begin? If so, you’re going to want to read my tips on what to buy and where to start to maximize your investment.

For most first-time investors, the choice is usually between a Single Family Home or a 2-4 unit property, commonly called Duplex’s, Triplex’s and Fourplex’s. There are large differences between both and you should fully understand them before plunking your money down. In this segment we’re going to focus on Single Family Residences or SFR’s for short.

SFR’s provide an investor with the greatest leverage possible, meaning you can put the least money down. It’s not unusual to buy these types of deals with 10% down, meaning on a $150,000 home, you’ll only need to come up with $15,000 plus closing costs. This makes these types of investments very affordable for most young investors who don’t have a lot of capital to begin. Be prepared, however, to feed the alligator every month, because these properties typically don’t debt cover, which means the rent you collect every month probably won’t be enough to cover your mortgage payment, tax bill and any other expenses you have.

Most often these properties are purchased as pure speculation or appreciation plays, meaning the goal is to create equity over time. For example, if you bought a property for $150,000 with 10% down, and were able to resell it in 3 years for $175,000, you’d earn $25,000 on your $15,000 investment, which equates to a 167% ROI over a 3 year hold!

Not bad, but be careful when buying these types of deals, because your goal is to come as to close to breakeven as possible, so you don’t have to come out of pocket. And remember, if you’re tenant moves out for any reason, you won’t have any money that month to cover the mortgage or expenses, so make sure you have 3 months of mortgage payments in reserve for a rainy day.

And remember, the more SFR’s you own, the more tenants and properties you have to manage. It’s easier to own a 10-unit apartment building than 10 SFR’s since you only have 1 roof and 1 lawn to mow, versus 10 roofs and 10 lawns. Finally, as soon as you’re able, take your equity gains from the SFR’s and 1031 into properties with multiple units so you can begin your climb up the Property Ladder.

For more information, tips, and services visit http://www.theresnofreelunchinrealestate.com/

Buying Your First Investment Property – Part II

Tuesday, April 7th, 2009

By Jon Swire

Are you finally ready to take the plunge and buy your first investment property?

In Part I of this segment we discussed the pros and cons of making a Single Family Residence your first investment. Now I’d like to discuss the benefits of 2-4 unit properties, also called Duplex’s, Triplex’s and Fourplex’s.

2-4 Unit properties typically require 10-20% down, providing an investor with the ability to get pretty good leverage and come out of pocket with a smaller down payment compared to traditional multi-family properties consisting of 5 or more units. Remember, your goal is to find a property with a high CAP Rate and low GRM, so you debt cover each month. This means the rental income you collect each month will be enough to cover all expenses (taxes, insurance, utilities, etc.) plus the mortgage.

Like SFR’s, these properties are often purchased as pure speculation or appreciation plays, meaning the goal is to create equity over time. Unlike SFR’s, 2-4 unit properties have a lower Vacancy Loss Risk since there are more units to spread the risk over. So, if one of your tenants vacates, you’ll still have the rent from the remaining units to help pay your mortgage and monthly expenses. Remember, however, that you may still need to come out of pocket, so make sure you have 3 months of mortgage payments in reserve for a rainy day.

2-4 unit properties are a great place for you to cut your teeth and learn the basics of Property Management. They’ll provide you with the opportunity to rent units, negotiate leases and perform routine maintenance. I suggest you hire a local property manager for the first 6-12 months of ownership so you can ride shotgun and learn the basics of management before you completely take the task on yourself.

Like SFR’s, once you’ve built up some equity in these properties, you’ll want to sell them and do a 1031 Exchange into a multi-family property consisting of 5 or more units. 2-4 units are one of the first rungs in the Property Ladder and a great place to begin on your way to building a real estate portfolio that will generate enough passive income for you to retire on.

For more information, tips, and services visit http://www.theresnofreelunchinrealestate.com/

“Knowledge is Power”

Tuesday, March 31st, 2009

By Jon Swire

View my video blog discussion real estate investment and education

I am a strong advocate of the saying, “Knowledge is Power!” I truly believe the more you know the more equipped you are to take advantage of opportunities that come before you. I know from experience that this rings true in the world of real estate investing. Today’s market is perfect time for you to educate yourself on smart investing tactics and begin to build the foundation for your future wealth. Like the 90s, these conditions are prime opportunities for those who have the tools and knowledge about investing to garner a steady passive income for years to come.

Many people are held back by fear and are unwilling to take risks, but today’s economic state is ripe with opportunities if you have the right tools. My program will give you all the tools you need to be prepared for a future investments and become comfortable with how investing works.

Thanks for visiting.

There’s No Free Lunch in Real Estate

Radio interview with New Day Talk Show

Friday, March 6th, 2009

By Jon Swire

I had the opportunity recently to sit down with Lynette Jones of New Day Talk Radio and discuss the current state of the real estate market as well as how real estate investors can take advantage of today’s low prices and turn them into the foundation of their future wealth.  Listen in as we talk about Obama’s Stimulus package, the Stock Market and falling real estate prices.  Additionally, we discussed the value of education and coaching as the cornerstones of any successful real estate investing career, and how careful planning can help ensure you achieve your goals.  Remember, the key to being successful is to first educate yourself and then find a mentor/coach who can help you purchase your first deal, showing you the ropes along the way.

Listen to the interview here:
http://www.theresnofreelunchinrealestate.com/news.html