Observations on income taxes on your free and clear investment portfolio

Many of the articles I have written on InvestingArchitect.com have originated from discussions with investors like you. A few months back, Robert - a regular reader and "subscriber" to our Blueprint strategy - made the following observation. One thing I have noticed though is that the income taxes I am paying keep increasing as the properties are paid off. Typically when you have a leveraged property the cash flow is completely tax sheltered by the depreciation. When the property is free clear … [Read more...]

How to increase velocity of money to turbocharge your investment returns

Fact: Every investor I've had the privilege to help has worked extremely hard to earn and save the capital required to make long term real estate investments. So it's no wonder that as an investor you want to put in practice strategies that maximize your return on that capital. But I have a slightly different take on this matter. Because I've seen first hand how hard many of you work to create that capital, we have a duty to make that capital work as hard as possible to help achieve your … [Read more...]

The invaluable lesson a Roger Federer video taught me about long term real estate investing

Roger Federer, arguably the best tennis player in the history of the sport, visited the Google campus in Mountain View a few weeks back along with his coach Stefan Edberg (one of the game's greats in his own right). During that visit, they put on Google Glass and shot a fascinating video that showed a tennis match from the perspective of these two great players. Take a look: As I was watching that video, an interesting thought crossed my mind. As good as Edberg was in his day, he never … [Read more...]

Case Study: Small multifamily investments in growing Texas market

When market dynamics change, long term real estate investors have to adapt their approach to stay on track and accomplish their goals. Previously, I articulated the case for branching out into other growing markets and different property types when market conditions restrict supply to the extent that it threatens the investor's acquisition needs. Today, we are going to get deeper into the nuts and bolts of purchasing new construction, luxury small multi family properties (duplexes) in a growing … [Read more...]

Branching out to solve the Biggest Challenge: Small multifamily properties

In an article I wrote at the beginning of the year, I summarized the biggest challenge of 2014 for long term real estate investors in a single word: Supply. Now that the second quarter of the year is almost coming to a close, that prediction has become reality. And as we go into the summer months, supply historically shrinks even further as demand rises. In the meantime, your financial goals are still there, calling for acquisitions to be made to build income streams that lead to financial … [Read more...]

To Domino or Not to Domino? That is the question

A very interesting debate has sprung up in a BiggerPockets Forum about my article on how to build a six figure income using real estate investing. In that discussion, the participants make different pro and con arguments over the use of the Domino Method to accelerate the payoff of debt in your portfolio. I think it would be beneficial for our readers here as well as the participants of that discussion if I addressed each argument in greater detail. Not sure if I like this method... takes 149 … [Read more...]

How to properly calculate the return on a long term real estate investment

This may come as a surprise but in my experience, most real estate investors don't know how to properly calculate the return on investment on a particular piece of property. Couple that with the fact that ROI is the metric most investors use to make crucial decisions about investing and you have a recipe for disaster. Or at the very least, a recipe for missed opportunities. First, let's illustrate how most investors calculate the return on investment by looking at an example. Suppose there's … [Read more...]

The principal reason you won’t become wealthy investing in real estate

The majority of my writing here covers real estate investment strategies and mindsets you can use to become wealthy with long term real estate investing. In various case studies, I have shown you how to create a six figure income  and how to retire in seven years  etc. by making smart real estate investments tied by the common thread of a solid Blueprint strategy. And that's all well and good. We all can benefit from a little more "big picture" insight to help us design and take charge of our … [Read more...]

Houston Economy strength in numbers: GHP Report for 2013

Every year, the Greater Houston Partnership publishes a detailed report on the Houston economy which is a great chance for a numbers geek like me to sink my teeth on an ungodly amount of data. Below are a few highlights from the report. As of November 2013: Unemployment rate: 5.6% (vs. 7.0% national unemployment rate) Employment: 2.8% Job growth - Greater Houston area added 86,200 jobs during the previous 12 months (Number #1  in the State of Texas). During 2014, the GHP predicts … [Read more...]

On our need for structure and escaping the affordability mentality

Most of the articles I have written for Investing Architect revolve around strategies, ideas and plans you can apply and reach your retirement and wealth goals. But I am a firm believer that even the most brilliant of strategies would not be executed properly in the absence of the right mindset. So, I've been thinking about a couple of concepts that can substantially influence our mindset and I'd like to share those thoughts with you. On structure First, let's look at an instance … [Read more...]

The biggest challenge of 2014 for long term real estate investors

Sometime around the summer of 2013, the investing landscape in Houston began to change at a rapid pace. Demand soared, inventories shrunk to record levels and the Houston real estate market lit up like a wildfire. Bank owned foreclosures, the perennial sweethearts of investors everywhere that had accounted for one in four sales just a year ago, now barely contributed six or seven percent. The few properties that banks were bringing to market were either inaccessible to investors (in favor of … [Read more...]

Scorching Houston rental Market in August: Record rents (+6.6%) and properties leased (+14%)

I've been absent around these parts for a couple of months because let's face it: Who wants to hear about real estate market statistics when the alternative is to carry your favorite ice cold adult beverage as you contemplate how it will take before the waves reach your  beach chair. But now that the tan is starting to fade away, it's time to get back to business. And what better way to dive right in than to take a look at the performance of Houston's rental market during the month of … [Read more...]

May rental market report: Available inventory and units leased jump as days on market shrink

The rental market data for the performance of investment grade rentals during the month of May is in and it offers some fascinating insight. First let's start with the biggest surprise: At the end of May, the available inventory of rental properties in the quality submarkets that we track jumped to 569 (+22%  over April) even as the units leased during the month of May increased 9% year over year (and 7% over last month). In my opinion this comes as a result of two factors. First, this is an … [Read more...]

How to find and screen tenants for your investment property

When you are trying to reach your retirement goals using a long term real estate investing strategy, there is a multitude of factors can make the crucial difference between success and failure. To mention a few, the quality of the location and school district, the price to rent ratios in your portfolio and the terms of your financing are all factors that lead to underwhelming results when compromised. But if I had to pick one factor that all successful long term real estate investors must get … [Read more...]

Houston housing market continues upward surge: Double digit gains in sales and prices

If you were expecting the Houston housing market to take a breather in April after the strong performance in the first quarter, you'd be very disappointed with the numbers reported by the Houston Association of Realtors. Instead of a pause, the market continued its uncompromising upward surge by posting double digit year on year gains in sales and prices. Below are the fundamental stats worth knowing: Single Family homes sold: 6482 (+ 27% from last April) Single Family average price: … [Read more...]

April rental market report: Highest rents on record plus units leased soar 24%

Every year since 2007, the number of properties leased during the month of April had been 8-10% lower than the corresponding March figure. This year, the Houston rental market shattered this well-established trend. According to statistics obtained directly from the MLS for investment grade rental properties, a total of 507 single family homes were leased during the month of April. That figure represents a 24% increase year over year and an 8% jump over last month. The solid jump in units … [Read more...]

In the path of growth: Exxon’s mammoth campus under construction in North Houston

During the acquisition phase of your Blueprint real estate investing strategy, the temptation is to focus exclusively on well established neighborhoods. But as a neighborhood becomes more and more established, home prices rise and returns drop. So how can you get better returns without sacrificing quality? You buy properties in the path of growth. That well established neighborhood of today was at one point not so well established. Needless to say, investors that purchased properties in … [Read more...]

Houston housing market: Inventories Shrink Further Pushing Sales and Prices Up in March

The housing market in Houston strengthened further and posted higher sales and prices during the month of March fueled by an ever shrinking inventory of properties. As usual, I want to give you the "espresso" version of the report with the numbers you need to know: Total sales came in at 7006 properties (19% increase over March 2012) Active listings on the market were 32,704 (down 22%) Pending sales  were 4433 (up 6%) Average price was 236,195 (up 4%) Median price was 172,000 (up … [Read more...]

Fine tuning your asset protection strategy for real estate investing

A few weeks back I wrote about how long term real estate investors can protect themselves from liability exposure. That article argued that a wise investor that builds a great long term real estate portfolio must also build a strong impenetrable "wall" around it for protection. A properly constructed asset protection strategy protects you in two primary ways. First, it protects you and your other assets from liability that might arise from your ownership of investment real estate. In that … [Read more...]

Fine tuning your asset protection strategy for real estate investing

A few weeks back I wrote about how long term real estate investors can protect themselves from liability exposure. That article argued that a wise investor that builds a great long term real estate portfolio must also build a strong impenetrable "wall" around it for protection. A properly constructed asset protection strategy protects you in two primary ways. First, it protects you and your other assets from liability that might arise from your ownership of investment real estate. In that … [Read more...]