What's the Key to Getting a Good Return in Real Estate?

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 As the Southern California market continues to improve, many have asked us about investment properties in the area. Today, we update you on what's going on in the investment market and how you can take advantage of it. 

I've recently helped a lot of past clients purchase investment properties in various neighborhoods. The sweet spot for investment properties appears to be in the $150,000-$400,000 range. When you start getting above the $400K mark, the rents are not high enough to compensate for expenses and you end up breaking even or going into the red.

If you stay in the sweet spot, many times, with 25% down, we're seeing a 7%-10% return on investment before depreciation. If you take into account the benefits of depreciating your property, your returns can reach as high as 12%, which is a lot better than earning 1% or less by letting your money sit at the bank. 

In fact, some of my clients who bought recently and locked down interest rates at 4% or less, with the strong rental income they are receiving, reduced their 30-year loan term down to 12-15 years! 

All you have to do is pay your taxes, insurance, and perhaps some homeowners dues. This is guaranteed income for life! Finding the right property can be tricky, but we're here to help! It's our job to look at properties every day and identify the ones that can make a great investment for you! By making 100 outgoing calls a day each week, we find properties not even listed on the MLS! In other words, we're your number one resource for great investment properties!

If you have any questions about investing in real estate, or if you have questions of any kind, give us a call or shoot us an email. We would love to hear from you!

The Pros and Cons of Selling vs Renting Homes

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I've had people wondering whether they should try to rent out their home or just sell it and buy a new one. This is a great question, and it kind of depends on how badly you need that equity to buy another home. 

Some of my clients want to buy bigger homes, but don't have the money to do so. If you pull out the equity in your home during a sale, you can use that as a down payment on your next home. In this situation it wouldn't make a lot of sense to rent out the property if you needed the equity. I also see a lot of baby boomers wanting to downsize, and this would also be a wise time to sell your home instead of renting it out.

So, what would be a good situation for you to rent out your home? If you're looking to build passive income and you have a sizable amount of money to put down on another property, then I suggest that you make an investment in a rental home. This is a great way to create passive income, and it will allow you to expand your portfolio.

Just be sure that you've found another property to move into before you begin renting your home. These situations can get tricky, but usually making a purchase contingent upon you finding a home will do the trick. 

If you need assistance with this process, or if you'd like to talk about renting out your home for passive income, please don't hesitate to contact me!