These are the specific strategies I used to collect $4 million in real estate in just 7 years, and exactly how you can make money renting properties – like! Add me Instagram: GPStephan
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Step one: Buying a property below what it’s worth.
In real estate, you’ll find properties which occasionally go un-noticed…perhaps they’re not properly advertised, maybe the the property is in disrepair, or perhaps the seller under-priced it because they NEED to sell it immediately – and that’s where you come in. In real estate, it’s quite well possible to find a property worth $100,000 – and purchase it for $80,000. For you, that’s an extra $20,000 worth of value to just buying the house in the first location.
Step two: Fix it up to increase profits.
With each property I purchased, I’ve found a way to fix this up to INCREASE the value…real estate investing gives you the complete control to completely analyze a deal and determine how much money is to be made, EVEN BEFORE YOU BUY IT. And when doing so, it all comes down to knowing value and how estimating how much it’ll be worth with the renovations you do.
Step three: Leverage your money
When it comes to getting something, the great news is that YOU don’t actually need to use all of your own money…you borrow the majority of it from somebody else, instead! AND THE INTEREST YOU PAY IS DEDUCTIBLE AGAINST YOUR RENTAL INCOME!
Step four: long term appreciation
Over the long term, your property should go up in value as demand increases…and this means your property is worth MORE than you purchased it for. BUT, because your loan amount stays the same – this means you “profit” the gap.
Step 5: CASHFLOW
You can invest your money and get paid back profit every single month as your tenant pays you rent. This was also the reason I started investing in real estate in the first place… I just wanted a stable income I didn’t need to actively work for, and I wanted it to be fairly passive…and real estate was perfect for this.
The more money you’ve invested in real estate, the more cashflow you get, the more cashflow you get, the more real estate you can get, which means the more cashflow you get. It’s quite good.
Step Six: Depreciation
This is a tax-loss strategy where you can depreciate the cost of the property over 27.5 years against your rental income to show on paper that you’re taking a loss, even though you make money.
This is something you can’t actually do with any other asset out there, and this is why so many large investors prefer to put their money in real estate over just about anything else.
Step Seven: 1031 Exchange
This is when you can sell your property, then roll that money into ANOTHER property and avoid paying taxes on gain. Another tax-avoidance choice is to take advantage of the Home Sale Tax Exclusion. This means that if you live in a house as a PRIMARY residence for at least 2 of the last 5 decades, you’re tax exempt by the first $250,000 worth of PROFIT as a single individual, or $500,000 if you’re married.
Step Eight: Cash out refinance or HELOC
A HELOC is basically like using your home as a credit card…if you want to use $25,000 to go and purchase a model 3 Tesla, you can “borrow” in your home and then pay it back. It’s just like having access to your money, except you’re just shifting it from one asset to another.
Or a cash-out refinance, which is where you literally can take out CASH from your property – completely tax free – and then pay it back in the shape of a slightly larger mortgage payment.
And it’s with these strategies which can help you collect $1,000,000 or MORE in real estate with patience, understanding of the markets, and a long term investing outlook!
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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