Blog – Page 450 of 891 – Mike Pfefferman

07

Feb

Real Estate

How To Find Places To Buy Rental Investment Properties

How To Find Places To Buy Rental Investment Properties Real estate, which is a rental property, has the unique characteristic under the tax code of being able to depreciate it and pretend the asset is going down in value, while, if you are a clever investor, you will acquire property that actually increases in value. Additionally, there are other tax advantages for owning a rental property that can help shelter income.

Positive Cash Flow

The key to success with a real estate investment portfolio of rental properties is to build value while it is self-sustainable. Have the goal of creating positive cash flow from every owned property. Making $100 per month positive cash flow from a single property may not sound like much until you multiply that by 25 properties. A portfolio with those characteristics makes a nice passive income of $2,500 per month or $30,000 per year.

Leverage

Using leverage increases the return on investment (ROI) as long as you choose properties that are cash-positive enough to cover their carrying costs and do not lose value over time. The lower the amount of your money that you invest, the greater the leverage you have and the higher your ROI will be.

Finding Rental Income Property

Commercial rental income property is more challenging so it is best to focus on residential rental properties, especially when starting to build up a real estate portfolio. The things you want to look for when hunting for residential rental properties are a manageable median price for the area, an area that is showing steady annual appreciation in home values, and an area that is stable with no severe negative challenges now or in the foreseeable future.

City Opportunities

It is possible to find properties that are excellent investments in many parts of the United States. Here are some examples of cities that currently have investment opportunities so you can consider them and compare them to your location.

Here are the top ten residential rental markets as ranked by TurboTenant for 2020:

1. Reading, PA

Median Sales Price $140,000 — Annual Increase 11.1% — Average Rent $957

2. District Heights, MD

Median Sales Price $252,000 — Annual Increase 0.4% — Average Rent $1,408

3. Allentown, PA

Median Sales Price $145,000 — Annual Increase 19.0% — Average Rent $1,063

4. East Orange, NJ

Median Sales Price $273,000 — Annual Increase 10.0% — Average Rent $1,534

5. Nashua, NH

Median Sales Price $283,000 — Annual Increase 4.5% — Average Rent $1,524

6. Cincinnati, OH

Median Sales Price $163,000 — Annual Increase 3.1% — Average Rent $1,048

7. Paterson, N.J

Median Sales Price $268,000 — Annual Increase 11.9% — Average Rent $1,614

8. New Castle, DE

Median Sales Price $188,000 — Annual Increase 8% — Average Rent $1,884

9. Rochester, NY

Median Sales Price $136,000 — Annual Increase 5.6% — Average Rent $1,126

10. Hyattsville, MD

Median Sales Price $279,000 — Annual Increase 0.4% — Average Rent $1,982

Summary

It is possible to find cash-flow positive properties in all of these markets, so they are all excellent examples of what to look for when you are hunting for a residential rental property to acquire. Be sure to work with a qualified local REALTOR® who knows the market well that you are considering as well as your trusted home mortgage professional.

06

Feb

By First Rate Financial Group

Mortgage

Investment Property Down Payments: How Much Will You Need?

Investment Property Down Payments: How Much Will You Need Investing in real estate is a great way for someone to diversify his or her assets; however, there is a common hurdle that almost all real estate investors face. This comes in the form of a down payment.

It can be a challenge for someone to come up with enough cash to fund the down payment on a home or piece of land, let alone multiple properties. At the same time, how big of a down payment does someone really need? There are a few factors that someone is going to need to consider.

The Conventional Mortgage

There are plenty of investors who like to stick with a conventional mortgage for their investment properties. This makes sense because this is a format they are familiar with. For a conventional mortgage, the down payment is going to fall between 10 and 25 percent.

When taking out a conventional mortgage for an investment property, the lender is typically going to want a larger down payment. For a single-family property, most lenders are going to expect at least 15 percent of the purchase price. This number can be as high as 25 percent of those who are investing in an apartment building, condo structure, or any multifamily unit.

Those who are looking to put down a smaller down payment will need to finance the investment property as a second home. While this might be an interesting thought, anyone looking to purchase an investment property as a second home will need to spend at least some of their time at this location. For a second home, someone might be able to get away with a 10 percent down payment.

A Smaller Down Payment For Multifamily Buildings

There is another way that someone might be able to successfully apply for a smaller down payment. FHA mortgages tend to have higher fees; however, they require smaller down payments. For example, even a multifamily property may only require a 3.5 percent down payment with an FHA loan.

In this example, someone could purchase a multifamily building for $600,000 and only have to put $21,000 down. Those who are willing to stomach higher fees might want to check out the possibility of an FHA loan.

If you are interested in purchasing an investment property, be sure to consult with your trusted home mortgage professional to discuss financing options for your specific situation.

05

Feb

By First Rate Financial Group

Mortgage

Green Energy Tax Credits For Home Improvement & Energy Efficiency

Green Energy Tax Credits For Home Improvement & Energy Efficiency Many individuals and families are looking for ways to reduce their energy consumption. Running the heater during the winter and the air conditioner during the summer can have significant impacts on someone’s energy consumption and costs. It should come as no surprise that many people are trying to reduce their HVAC usage to save money; however, there is a better way.

Individuals and families can permanently reduce their fossil fuel usage and carbon footprint by investing in home improvements. Better yet, local, state, and even the federal government wants everyone’s home to be more environmentally conscious, or “green.” Many utility companies want people to act in the same way. That is why there is a slew of incentives for homeowners who are willing to make their homes more Earth-friendly.

Government Tax Credits For Green Initiatives

Many of the tax credits the government is offering for “going green” are going to run through the end of 2021. They are available to any homeowner in the United States who files a federal tax return. Applying for tax credits is done by filling out Form 5695 from the IRS.

Some of the biggest tax credits come from solar energy generation. The first example of a solar energy system comes in the form of a solar water heater. All Energy Star-rated solar water heaters will qualify for this tax credit. Typically, solar water heaters cost somewhere between $2,000 and $5,000.

The other biggest source of solar energy comes in the form of solar panels. Solar panels need to generate electricity directly for the residency and must meet all safety codes. Typically, solar panels cost between $25,000 and $35,000. Even though these sound expensive, the costs are dropping quickly and the tax credit makes the system worth it in the eyes of many homeowners.

Wind Energy

Homeowners can also qualify for green energy tax credits through the use of wind energy. The cost of a wind turbine strong enough to power a home will vary widely. Some may cost $15,000 while others may cost $75,000.

Keep in mind that, in addition to the tax credit, these systems may drastically cut someone’s utility costs. Eventually, these systems should pay for themselves. For this reason, green energy has become an attractive option for many homeowners.

If you are in the market for a new home or interested in refinancing your current property, be sure to consult with your trusted home mortgage professional.