Hello everyone
Darcy Marler here with Hutton Radway, Real Estate Investment Advisors
“Helping You Get The Most Out Of Your Real Estate Investments”
Today we are going to talk about ‘Why Buy Real Estate?’
One of the main reasons we like real estate and are comfortable with it is that you have a lot more control over your investment than you do with stocks or mutual funds. Let’s face it: when you buy stock, no matter how much homework you do on it, after you buy it, you have no control over it.
Once you buy 100 shares of Coca Cola, you have no control over what the stock price will be, what management does day-to-day, what the rest of the investing community will do with the company, etc.
Compare that to real estate: You control what strategy you want to follow (long term rentals, fix and flips or land development for example), you control where you buy (both what city and what community within that city), you control what you buy, you can negotiate terms and price with the seller so that you control what you pay for the property, you control who will rent or lease your property, you control what renovations or improvements you make to that property, you control who will manage your property, you control (within market realities) your revenue and costs, and you can control what time period your investment will take.
The other thing we like about real estate is leverage. Yes, you can buy stocks with borrowed money but, typically, this maxes out at 50% and the brokerage company will be quick to do a cash call if the stock price starts falling.
Compare that with real estate. Depending on what type of property you buy you can borrow between 50% and 80% of your investment property. In effect, the bank becomes your partner and over time the bank and your tenants will buy your property for you. No other investment will do that for you.
Rental real estate allows you to benefit from three different revenue streams:
Appreciation: Over time, real estate values traditionally rise in value. We don’t count on that but treat it as a bonus when it happens.
Mortgage Pay Down: Every month, your tenants will be paying your expenses and most importantly your mortgage. Part of the mortgage payment is interest, but part of it will be principal. This part increases your ownership stake in the building bit by bit, month by month.
Cash Flow: You make money each month via positive cash flow from rental income
In addition, if you buy a property that has issues and fix it up, the difference between what it costs to fix up and what the new value is, increases your ownership or equity in the building.
Don’t buy real estate assuming the property will grow in value. Buy long-term buy-and-hold real estate for the leverage, the increased control, the cash flow, relative market stability, and mortgage pay down. Appreciation is the bonus.
In the long-run, real estate is a lot more predictable, reliable, and stable than most other investments (the stock market for instance). Your property may go down in value a few percentage points in a down market, but it won’t drop 20% in a day like your stocks can. It simply doesn’t have the same volatility.
If you would like to talk about this or any other real estate investing questions you may have please feel free to contact me (or ‘Like’ or ‘Follow’ me) on the platforms below.
Text: 403-615-1316
Email: darcy@huttonradway.com
Website: www.huttonradway.com
Blogs: www.huttonradway.com/news
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LinkedIn.com/in/darcy-marler-27b81831
The following is what we do here at Hutton Radway:
- We are always actively looking for Joint Venture money partners to purchase real estate with
- We Help Investors Purchase and Manage Residential Properties
- Homes / Duplexes / Fourplexes / Apartment Buildings
- We Help Investors Purchase and Manage Commercial Properties
- Industrial / Warehouse / Medical & Office Buildings
- We Help Investors with Projects
- Land Development / New Construction / Condo Conversions
- We Help Investors Invest Without Owning Property
- First or Second Mortgages / REIT’s
- Real Estate Banking
- Being the Liaison for Offshore Investment into North America
- Wholesale Buying and Selling of Rentals and Fixer Uppers
We look forward to hearing from you.
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