Purchasing cash flow properties can be one of the most lucrative business plans an investor can make and fortunately, today's market offers many opportunities to enhance one's economic situation. There are many advantages of purchasing cash flow properties which include residual income and increased overall net worth.
Per Fannie Mae's guidelines, today's lending industry allows an investor to obtain a loan on up to 10 properties. Each property provides the potential of a substantial increase in residual income. For example, the average home price in Arizona is $168k, and investor interest rates are around 6.5%, which would equate to about $1k/month total payment on a 80% loan to value loan.
County, a property which could be purchased for $168k would generate, on average, an additional $300 per month for a total of $3,600 per year of income. Not a bad return, considering you are leveraging the bank's money, and your cash investment would be limited to the 20% down-payment, or about $33,600 plus closing costs. This is above and beyond any amount of interest that could be earned on a typical stock/bond investment, plus you would have 20% equity in the property, and could have generate tax deductions. Now imagine if you could buy that $168k house, already remodeled, with a tenant in place, and at a discount. Your risk and time involvement would be reduced, and your monthly cash flow would increase. For companies that might offer such a program, Google something like "cash flow properties for sale in AZ".
Another benefit of growing one's real estate portfolio is increasing overall net worth. Buying below market instantly increases net worth and has the potential to grow exponentially, as the real estate market recovers and your properties appreciate in value. An investor who purchases 4 investment properties, each at $15-20k below market, instantly increases his/her net worth by $60-80k, in addition to earning the monthly cash flows. There are great Cash flow properties for sale in Arizona right now, where many professionals believe the market is at or very near its bottom. Arizona continues to be a prime destination for winter visitors, college students, business professionals and young families, making this a seemingly optimal place to invest when starting or building upon your real estate portfolio.
**Remember to interview your Realtor to know for certain if they are experience in the many facets that would involve an investor. There are many aspects that are different than buying for a home owner. Our team is experienced and can provide success case studies for reference. We are ready to assist you in building your real estate wealth!**