Cash Flow Real Estate
The book Harder Working Money describes multiple ways to become involved in real estate investing, from flipping (short-term ownership of fixing up properties and re-selling to new homeowners), to buy-and-hold ownership of rental houses and apartment buildings. While you may choose to do this alone, we also provide joint venture opportunities where you can leverage our experience and vast relationships to access great opportunities.
Whether for short-term flips or long-term buy-and-hold, in cash flow real estate properties are typically purchased well below full market value. Often they also have physical or management problems to solve, which represent opportunities to force appreciation. The combination of these factors can create significant equity (book value) in the short-term.
Owning rental real estate is an ideal source of passive cash flow for the long-term. One benefit is that rental income is taxed at a lower rate than earned income, improving your cash flow’s efficiency. Also, since residential real estate can be depreciated over 27 years; this often shelters much of the monthly cash flow from taxes. Additionally, when purchased with a mortgage, a portion of the tenant’s rent pays down the principal balance every month which increases your equity.
While in some markets there is natural appreciation of real estate values which increases your equity just for holding the properties, in all markets rental rates tend to go up with inflation. Since investment real estate is valued on the basis of its income-earning potential, this makes holding rental properties a great hedge against inflation and devaluation of currency.
Opportunities for Participation
A key element in our Harder Working Money strategy is to build portfolios of cash flow rental properties. We welcome passive/joint venture participation in these deals. If you are interested in achieving the benefits of rental real estate but don’t have the time or knowledge to do it safely on your own, please talk to us. We will certainly be acquiring more rental assets this year.