Big Wealth For You

To become a successful real estate investor there are 5 key areas that need to be mastered.

1) Becoming an expert at property acquisition
2) Understanding the rule of 7
3) Using Leverage to your advantage
4) Maintain strong cash flows
5) Tax Benefits

Whilst there are many other factors that need to be considered by the property investor these are 5 critical aspects to increase wealth.

1) When looking for the right property to purchase, DO NOT expect to find the perfect investment property within the first few days. Hours of sorting through properties will be required to find the best property to maximise returns. DO NOT expect to find the perfect property around the corner from you, or in the neighborhood next door. You need to be flexible and look abroad, even interstate or overseas. When looking for an investment property you need to focus on return on investment. In other-words, how much money will I make on what I have put in. For instance when I invest in property, I will measure the return as a percentage, if I put $10,000 down as a deposit, and make $10,000 on that in the first year that’s a 100% return; not a bad result. How do you achieve these results and replicate them many times to create wealth? Read on to learn.

2) The rule of 7 is simple. It stats on average a properties value doubles every seven years. This has shown to be historically true over the last 50 years, so there is no reason why this shouldn’t hold into the future. This underlying rule is what so many investors have relied upon to create wealth, many times over. Understand this and you will be on your way.

3) Leverage is a wonderful tool for the investor. It allows us to place a small deposit on a property and reap the entire capital gains. For instance if I place a $20,000 deposit on a $200,000 house, and the house goes up 10% in the first year that’s 100% profit. On average property has gone up 10% per annum so you would effectively make 100% every year on the property. Any rental income would be used to service the $180,000 debt. Now if you did this across 10 properties outlaying $200,000 you would be making 100% per annam. In comparison, if you outlaid the whole $200,000 on one property you would make only 10% profit per annam as the one property would only go up 10%. Sure you would make some rental income as well but this would be relatively insignificant.

Now once the property goes up in value you can then use that equity to purchase more properties, so then it just keeps building up like a pyramid creating more and more wealth. The problem is most people are afraid of debt and avoid it at all costs. Only be afraid of bad debt, which are loans secured by liabilities. Loans secured by appreciating assets are good debt.

4) Maintain a strong cash flow and ensure at all times you can service the debt with the rental income you are receiving. If you cannot do then move on to the next property on your search list.

5) Do not overlook the tax advantages, which can be used to improve your cash flows. Claim everything you can, expenses, repairs, loan costs, management costs, administration costs, and most importantly DEPRECIATION. If something is not claimed it is usually depreciation. This deduction is something you can claim without outlaying a cent (except for maybe a depreciation schedule report). If your investment property is fairly new you can add thousands to your bottom line. Do not forget this one.

Real estate investment is not tricky, it just requires a bit of research and a sound plan of attack. If you can master these 5 key points you will be well on your way to success. Good Luck

© 2009 copyright Real Estate Investment.

After one and half years of declining housing sales, the trend is changing and sales are bottoming in most regions in the US. The latest US Housing Numbers (released July 30, 2009) reported that the rate of declining home sales is decreasing at a lower rate and is on a path of actual overall growth by years end.

Possibly related is the fact that the majority of areas in the US are starting to see the values of their homes increase once again. This is a long time coming as many people have seem their home investment turn upside down, meaning the mortgage owed is more then the house is worth. So with the housing prices starting to rise it signifies hope that more homeowners will be above water again before long. It’s morel lift is already starting to improve sentiment, which in turn will help the US come out of the current recession at a quicker rate.

Simultaneously the number of foreclosures is still increasing resulting in a surplus of foreclosure homes on the market for investors to choose from. Surprisingly there have been more then 1.5 million homes that received a foreclosure filing in the first half of 2009. Foreclosure investors can get the absolute best value right now, many times for 30%-40% less than the building and land costs. They can also feel comfortable because the price of the homes have bottomed. So not only are foreclosure investors receiving a deep initial discount on a home they will start to benefit from property appreciation.|

If the cost of a house is $100,000 and is foreclosure discounted 40% ($60,000) and the property value 30% above that cost ($130,000), then the investor has immediately doubled their investment. This occurs far more often than you would expect, however, in order to double your money property improvements must be done to improve it’s curb side appeal. Often this simply requires a good cleanup and some paint.

Probably the best investment available is obtaining a foreclosure, improving it’s visual appeal and flipping or renting it; just ask Donald Trump. Most home buyers either do not understand foreclosures so they are reluctant to try, or they have a false perception that good foreclosure properties are hard to find. That’s okay if that is what they inaccurately believe, it just leaves that many discounted houses left for astute investors like us.

To review the top sites with the most foreclosure and property tax sale listings (over 500,000) visit Property Foreclosures.

Nolan Speers has been investing in foreclosures and property tax sales for over 15 years. He is the founder and administrator for Government Auctions Reviews.