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Add You - Are Your Real Estate Holdings Maximizing Your Investment Portfolio?
The purpose of buying insurance is to transfer risk. In the case of long term care insurance, you are transferring the cost of long term care whether it is in-home residential care or nursing home care, to the insurance company.Long term care is expensive. The goal of long term care is to pay for the care of chronically ill patients. Unlike traditional medical insurance, where payments are made in order for the patie
The 4-Phase Portfolio
Real estate investors can mitigate the problems Mary has experienced by simply using the right property types for their intended purposes and by building the 4-Phase Portfol
An avid cyclist and bike racing fan, I sit transfixed during the many hours of Tour de France coverage every July when the race rolls around. This year, during some of the less-than-scintillating early miles of the sprint stages, my mind wandered a bit, and it occurred to me that there are some interesting parallels between winning the Tour de France and winning at personal finance. Having watched Lance Armstrong pul
Mary, a community leader, volunteer and mother, decided that she wanted to do something to add to her family’s long term financial security. Mary’s husband was employed by a large pharmaceutical company and while there was no immediate need for cash or cash flow, Mary had a plan. Her plan was well thought out; discussed with her husband and received the blessing of their family’s trusted advisors, their CPA, attorney and financial planner.
The plan was to use some of their existing investment capital, along with leverage to purchase single family and small multi-family residential properties. Mary determined that at the current area rents, if she put between 10% and 20% down on each property, each one would cash flow approximately $100 to $150 per month. Over time, she expected the loans on each property would be paid down and her cash flow would rise.
What Happened Next
Over the next three years, Mary bought 14 properties with an average purchase price of about $185,000. She put approximately $450,000 down and calculated that she would be receiving between $1,500 and $2,000 per month in passive income.
Unfortunately, vacancy was consistently higher than expected, local market conditions remained flat and she discovered that even one extra vacancy completely wiped out every penny of her anticipated monthly cash flow. Paying down the loans did not happen and market conditions prevented values from rising. What Mary ended up with, was the reality that she had traded cash for a rather significant negative cash flow.
Mary made the common mistake of using residential housing in her attempt to create cash flow. While she had the right goal, cash flow, in mind, she failed to calculate the external impacts of local market conditions on reaching her goal. In essence, Mary used the wrong property type in an attempt to reach her cash flow goal.
The 4-Phase Portfolio
Real estate investors can mitigate the problems Mary has experienced by simply using the right property types for their intended purposes and by building the 4-Phase Portfol
You may be aware of them, you may not be. In any case, chances are high that even if you are aware of them, you probably don’t realize the negative impact they are having on your business. What are they? Things you are tolerating in your work environment.Anything you are tolerating is called a “toleration.” Tolerations are situations and experiences that you don’t like, that irritate you and drain your energy. The gr
The plan was to use some of their existing investment capital, along with leverage to purchase single family and small multi-family residential properties. Mary determined that at the current area rents, if she put between 10% and 20% down on each property, each one would cash flow approximately $100 to $150 per month. Over time, she expected the loans on each property would be paid down and her cash flow would rise.
What Happened Next
Over the next three years, Mary bought 14 properties with an average purchase price of about $185,000. She put approximately $450,000 down and calculated that she would be receiving between $1,500 and $2,000 per month in passive income.
Unfortunately, vacancy was consistently higher than expected, local market conditions remained flat and she discovered that even one extra vacancy completely wiped out every penny of her anticipated monthly cash flow. Paying down the loans did not happen and market conditions prevented values from rising. What Mary ended up with, was the reality that she had traded cash for a rather significant negative cash flow.
Mary made the common mistake of using residential housing in her attempt to create cash flow. While she had the right goal, cash flow, in mind, she failed to calculate the external impacts of local market conditions on reaching her goal. In essence, Mary used the wrong property type in an attempt to reach her cash flow goal.
The 4-Phase Portfolio
Real estate investors can mitigate the problems Mary has experienced by simply using the right property types for their intended purposes and by building the 4-Phase Portfol
Caring for a high gain projection screen is important. Practicing good cleaning and handling of the screen will protect it from damage and extend the life of the screen. It is essential in protecting the investment and keeping the screen useful.Caring for a high gain projection screen starts when it is first purchased. Screens usually come rolled or folded. The first thing a person should do is wait. It is very impo
What Happened Next
Over the next three years, Mary bought 14 properties with an average purchase price of about $185,000. She put approximately $450,000 down and calculated that she would be receiving between $1,500 and $2,000 per month in passive income.
Unfortunately, vacancy was consistently higher than expected, local market conditions remained flat and she discovered that even one extra vacancy completely wiped out every penny of her anticipated monthly cash flow. Paying down the loans did not happen and market conditions prevented values from rising. What Mary ended up with, was the reality that she had traded cash for a rather significant negative cash flow.
Mary made the common mistake of using residential housing in her attempt to create cash flow. While she had the right goal, cash flow, in mind, she failed to calculate the external impacts of local market conditions on reaching her goal. In essence, Mary used the wrong property type in an attempt to reach her cash flow goal.
The 4-Phase Portfolio
Real estate investors can mitigate the problems Mary has experienced by simply using the right property types for their intended purposes and by building the 4-Phase Portfol
Education plus Motivation is a powerful formula. But how do you ensure the motivation level in your prospective customers or yourself, for that matter, is really as high as it could be? Easy. You make sure to build pain into your motivation strategy. Our basic survival instincts mean that given a choice between finding pleasure or avoiding pain - we'll usually opt to avoid pain.Once you've persuaded someone to move away
Mary made the common mistake of using residential housing in her attempt to create cash flow. While she had the right goal, cash flow, in mind, she failed to calculate the external impacts of local market conditions on reaching her goal. In essence, Mary used the wrong property type in an attempt to reach her cash flow goal.
The 4-Phase Portfolio
Real estate investors can mitigate the problems Mary has experienced by simply using the right property types for their intended purposes and by building the 4-Phase Portfol
In the army, “the men” are kept separated from “the officers.” This comes from the idea that the leaders should not be too close to the individuals they command. In the military this makes a lot of logical sense because if you are too close, you might have a difficult time making decisions that could result in harm to someone. On the army base they have an officers club, where the officers eat and socialize. On Sundays the fa
The 4-Phase Portfolio
Real estate investors can mitigate the problems Mary has experienced by simply using the right property types for their intended purposes and by building the 4-Phase Portfolio as follows:
1. Develop a comprehensive short and long term real estate plan
2. Build equity using market selection strategies, residential real estate and land
3. Compound growth using Portfolio Compression techniques and a re-leverage plan
4. Convert your portfolio’s internal equity to cash flow using commercial real estate
Residential real estate, subdivision lots and development land are property types that should be used to build equity within the 4-Phase Portfolio. Commercial real estate, such as larger multi-family housing, industrial warehouse, medical office and retail strip malls to name a few, are property types that should be used to maximize cash flow potential.
Real estate investors need not start with $450,000 of investment capital as Mary did. They simply need to recognize that (1) using the right property types, (2) for their intended purposes and (3) in the right order, anyone’s real estate portfolio will significantly outperform the traditional buy and hold plan.
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