6 REASONS for investing Florida Real Estate Investment Property NOWI invite you to take
next few minutes to learn truth about real estate market, how it compares to other methods of building assets and why it is such a lucrative form of investing. Many potential investors will say, 'I need to get into Florida Investment Property market', especially taking into account current stock market fluctuations and HOT market for investment properties, but simply don't know facts about Orlando property investing and how to use sale and leaseback method of property management.
When is last time your financial advisor or stockbroker tried to convince you that moving a portion of your assets into Florida Investment Property market might be a good idea? Never Right? The 'why' is simple. They don't earn commissions when you buy Florida Investment Property. It is also likely that you have probably never had an 'apples to apples' comparison of stocks versus Florida Investment Property quite like one you will see here.
Reason 1: Leverage: Banks will not typically loan money to buy stocks. Banks will however, compete fiercely to loan money to buy Florida Investment Property. Your first question should be, 'why is that'? It has to do with risk management, which we will discuss later. The fact that banks want to loan you money to buy Florida Investment Property creates a situation which we will call LEVERAGE.
Let's assume that you have $10,000 to put into some type of investment. If you choose to buy $10,000 worth of stocks, you will own exactly $10,000 worth of stocks. Pretty straight-forward. However, suppose you choose to invest that $10,000 into Florida Investment Property using a 90% mortgage (which in many cases can go up to 95-100% mortgages in today's market), you will own $100,000 worth of Florida Investment Property. If both of your investments were to appreciate by 10%, your actual gain with your stocks would be $1000 where your actual gain with Florida Investment Property would be $10,000. That equates to an actual 10% return on investment vs. a 100% return on investment. That's what we call leverage.
Leverage: Florida Real Estate vs. Stocks The traditional argument against Florida Investment Property Investing (mainly from Stock Brokers) has always been 'I can get an average of 10% from stocks with little effort so why would I invest in Orlando Investment Property that only appreciates 6-7% per year'? This point-of-view is not taking leverage into account.
If you take above statement to be true and compare REAL numbers, stock investment gained 10% of initial $10,000 value (or $1000) and Orlando Investment Property investment gained 6% of initial $100,000 value (or $6000). That is still an actual return of 10% versus 60%. It is not hard to see which investment provides a greater immediate return on investment. Additionally. these numbers do not take into account any income from your property during course of year, or substantial tax advantages to owning property, which we will discuss later.
Reason 2: Value: As we mentioned previously, if you invest $10,000 into purchasing stocks, you own $10,000 worth of stocks (a fairly obvious point). If you invest $10,000 into purchasing Orlando Investment Property using leverage of a 90% mortgage, you own $100,000 worth of Orlando Investment Property right? Well, only if you paid retail for your property. Any savvy investor will tell you that there are excellent deals to be had in Orlando Investment Property, you just have to find them.
What if you purchased a $100,000 property that happened to be worth $110,000 day you bought it? Does it happen? The answer is yes, all time. If you have your eyes open and are willing to 'go through numbers' to find good deals, they are all around you. You may be asking yourself, why would anybody sell a $110,000 property for $100,000?
Value: Making money when you buy. The reasons are endless as to why a quick sale is desired, but just to name a few: job relocation, divorce, an estate is being settled or maybe a current appraisal on property simply wasn't done prior to selling. By 'finding this deal' you have accomplished two things.
You have added $10,000 to your asset column in form of equity.
You have created additional LEVERAGE for yourself as value of your property increases (a 6-10% gain on $110,000 is better than a 6-10% gain on $100,000!) Remember, you make money in Orlando Investment Property when you buy, not when you sell.
