Investing For Cash Flow and Financial Independence

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Financial Planners will always tell you to diversify. That’s a good idea except that diversification is usually exercised by most people solely through the purchase of many different mutual funds. It is still investing in mutual funds or the stock market. There are ways to obtain wealth (and financial security) that you may not currently be exploring, ways that go beyond buying mutual funds.

Instead of planning for retirement, plan to reach Financial Independence instead. True Financial Independence is an easily measurable known target, and is a goal that can actually be reached within a short period of time. How? Through passive income. Generate positive cash flow from hard assets such as real estate income property. Rental income is passive income for the most part, especially if you have a solid property manager taking care of the details.

The principles of creating a long-term, on-going cash flow can be applied to most kinds of real estate investments. Mobile home lots, apartments, garage/storage units, and houses all make excellent income producing assets. Houses, in particular, low-end houses, make an excellent vehicle for creating long-term cash flow for a multitude of reasons.

While appreciation is often the most significant form of profit for real estate investors, investing for cash flow is easier to determine and with lower risk. So how do you achieve positive cash flow ethically in the real world? You need to buy in the rare market where high capitalization rates (15%+) are the norm. Such markets are usually depressed like Rochester or Memphis and have a large pool of renters. The reason tenants are willing to pay more to rent than they would have to pay to own in such markets is that they believe property values are falling or level in which case not owning is a good idea in spite of the high rent. Positive cash flow is so rare and so desirable that it eventually attracts out-of-town investors. Their coming into Rochester or Memphis or wherever causes property values to climb so that high cap rates are no longer available.

There are the three primary ways that an investor makes money in real estate: 1. from cash flow, 2. property appreciation and 3. paying down of the mortgage thereby increasing their cash flow and equity. Only if you buy on a bargain basis can you get positive cash flow from a rental property.

Why low-end houses make the ideal Cash-Flow vehicle

First, houses are abundant. Every city, town, and neighborhood has houses. Houses are probably the easiest to buy because they are the most common. Houses are also probably the easiest to buy at a discount, since there are so many sellers who own them in some sort of crisis ownership position: Vacancy, disrepairs, judgments/liens, back taxes, etc.

Houses are the easiest to manage, with the possible exception of storage/garage unit rentals, since these are occupied with stuff and not people, thereby making evictions easy. Well-maintained houses will often keep tenants for a 3-5 year cycle, sometimes longer. Most of the other vehicles have shorter-term occupancy.

Houses are by far the easiest to sell because of the naturally large demand for places for people to live. In most cases the property will sell without holding paper, but many smart investors will sell their houses on some sort of payment contract and be able to charge a 10-15% price premium to the buyer without using a Realtor.

The so-called low-end house can be very desirable from an investor’s standpoint. First, lower-end housing doesn’t mean becoming a slum lord. It means basic, starter homes that are located in good, but not necessarily great locations. These marginal areas typically are more of a buyer’s market, thereby, tilting the negotiation in favor of a hard-cash buyer or a buyer seeking owner financing. Actually, owner financing is easier, much easier in these slightly marginal areas.

Next, these lower level houses can frequently be purchased at various distress auction (tax, foreclosure, estate) sales. In many areas of the US, these houses are bought for prices anywhere from as low as $5,000 to $25,000, without a lot of difficulty (after you know the many inside strategies and secrets).

These homes can typically generate rents of $600 – $900 per month, which based on the low purchase price makes an outstanding return on investment. Returns of 25% – 35% per year are common. It’s not uncommon for smart investors to receive income for 20 years or better from their houses. After this period of ownership many owners will find a stable buyer and sell the house with a vendor take back mortgage (payment contract) and receive another 10 to 15 years of “mortgage” payments.

Article Source: http://EzineArticles.com/4425895


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

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Memphis Real Estate

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A montage of lively communities, Memphis is no longer the laid-back port town it used to be. The downtown Memphis area is where the life of the city really is. Here one can find antique shops, restaurants, art galleries and coffee shops just a walk away. The downtown area is home to more than 23,000 residents – a number that is steadily growing with the building of houses, apartments and condos in the area. Downtown Memphis is home to Beale Street, the celebrated “Home of the Blues.” Beale Street features a number of bars and cubs that cater to jazz, blues and rock and roll music. Then there is the Pinch District, which is home to cafes and bars that are frequented by local residents and tourists that are attending events at the nearby Pyramid.

Midtown Memphis has some of the city’s most pristine neighborhoods. Tree-lined avenues are flanked by grand bungalows and apartments. Overton Park, located in the center of midtown, is one of the United States’ biggest urban parks. Some of the city’s numerous attractions are the Memphis College of Art, Memphis Zoo and the Overton Park Shell. Several universities and colleges augment Midtown Memphis’ diverse atmosphere. The neighborhoods include Vollintine-Evergreen, Cooper-Young, Overton Square and Central Gardens.

Most of Memphis’ high-status housing areas, shopping and office centers are situated in East Memphis. The Memphis Botanic Garden, Audubon Park, Lichterman Nature Center and other public parks and gardens give a unique appeal to East Memphis. Chickasaw Gardens, for one, is full of elegant houses. The Pink Palace Museum and Planetarium lie adjacent to that neighborhood. Then there is Cordova, which is a rapidly growing community in the Metro area.

Shelby County, outside of the main city, boasts of a number of beautifully integrated cities and towns. These include Arlington, Bartlett, Collierville Germantown, Lakeland and Millington.

Neighboring areas that surround the city include Fayette County, Tennessee; Tipton County, Tennessee; Crittenden County, Arkansas; DeSoto County, Mississippi; Tunica County, Mississippi; Tate County, Mississippi; and Marshall County, Mississippi.

Article Source: http://EzineArticles.com/218989

Memphis Buy And Hold is┬áspecializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

Tennessee Real Estate: Music to the Ears

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Tennessee is the state of prairies, towering mountains and country music. Inexpensive Tennessee real estate will also put a jump in your step.

Tennessee

Tennessee is a state with a little bit of everything. Parts of the states are comprised of lush, rolling fields with horse farms and agricultural. In other sections, you can find the Appalachian Mountains, which need no introduction. Of course, no mention of Tennessee would be complete without discussing the music scene. With cities such as Memphis, Tennessee is a mecca of music and, of course, the home of Elvis.

Memphis

If original music and an active nightlife are your things, Memphis is the city for you. The city is the home to vibrant blues, soul, country and rock scenes as well as numerous record labels. Historically, the economy of the city was tied to the cotton industry, but this is no longer the case in modern times. Instead, Memphis has become a modern city while maintaining its historic charm. If you are an avid Elvis fan, this is the place you will find Graceland.

Knoxville

Surrounded by no less than three mountain ranges, Knoxville is a picturesque city with a quiet atmosphere. Well, quiet so long as you don’t live next to the University of Tennessee, which is located in Knoxville. With a huge student population, the town rallies around the football team by filling Neyland Stadium with over 100,000 people per game. You have to see it to believe it.

Nashville

When you think about Nashville, you think about country music. Over five million people Nashville each year to immerse themselves in it. Home to the Grand Ole Opry, Nashville is best experience by hitting the nightlife. If you love country music, Nashville may be a great relocation spot. If you don’t, you should probably look for other locations.

Tennessee Real Estate

Despite being a physically appealing location with a hot nightlife, Tennessee real estate is very cheap. Single family homes in Memphis or Knoxville run in the $180,000 range, while the same home in Nashville is roughly $210,000.

Article Source: http://EzineArticles.com/83821

Memphis Buy And Hold is┬áspecializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com