Getting started with real estate investing

How to retire in 7 years with real estate investing

July 10, 2012

Real estate investors’ goals vary in nature: Sometimes it’s about growing their portfolio’s value or income from it to a certain amount. In other cases though, it’s all about time. How can they achieve what they want (retirement, financial freedom, quit the job to stay home with the kids) in X number of years? How many assets do they need to purchase and what level of invested capital will be required? And most importantly, how do all the pieces fit together in a coherent strategy?

Our Blueprint Investment Strategy can answer all these questions.

As an example, let’s look at a case study. Say you have a married couple in their mid 40s with 3 kids who have a combined income of $150,000/year. Their goal is to retire in 7 years with an income from their investment portfolio of $75,000/year. Now you might ask: How are they retiring if they’re only earning half of their current income? True, but think about what their current income funds: Their retirement investments, college funds, additional savings etc. All things that go away when you actually, you know, retire. So in this case, they’ve figured out that their living expenses would be comfortably covered by this $75k goal.

So let’s think this through. Each paid off property they will own at the end of 7 years, will produce about $11k/year in pre-tax income. So they will need to own about 7 debt free properties at the retirement finish line to accomplish their desired income.…

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How to create a six figure income with real estate investing

July 2, 2012

Have you ever thought about what your life would look like if you could create a six figure annual income from your long term real estate investments? Today’s post is about how the investments we plan and execute today could get you there at some point in the near future.

The math of creating a six figure income from your real estate investments is quite simple. Essentially, there are two, very different routes to get there:

The Blueprint Method we advocate involves fewer properties and much lower risk. The concept is simple but it requires a solid plan and the discipline to execute it. Look at it this way: each free and clear property in your portfolio produces an income of $11,000/year. In order to generate an annual income of $100k you would need to own 9 such properties. But you don’t have the capital to acquire 9 properties with cash today to produce that kind of income. Thing is, you don’t need to. We advise our clients to purchase quality assets with 20-25% down and then use the positive cashflow they produce to aggressively pay down the mortgages one at at time with focused intensity. For a more empirical illustration download the detailed analysis of this domino strategy on a portfolio of nine single family homes. In that example, the entire portfolio worth over $1.25M becomes free and clear in 12 years and produces a six figure annual income before taxes. Can your IRA or 401(k) match that kind of performance?…

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7 Powerful Tips on investment property management

November 1, 2011

The number one reason investors shun long term investing strategies is the perceived hassle of “landlording”. The concern is that this type of investment brings with it tenant calls at three o’clock in the morning, relentless maintenance, collecting trouble and the like. Since real estate investing success has as much to do with its return on investment as the overall investor experience, this is a valid concern that shouldn’t go unaddressed. So, I put together a list of 7 powerful tips to minimize the need for property management, eliminate hassle and increase your bottom line by saving on property management fees.

Property Management Tip 1: Buy New or Newer Properties

Most property management nightmares begin at the purchase. Seduced by “bargains” and equity, investors purchase three decade old properties with significant deferred maintenance and years of neglect. These “steals” often come with galvanized plumbing, electrical issues and air conditioning systems that have seen better days. Needless to say, these investors are setting themselves up for a bad experience that will often override any benefits brought by cash flow or captured equity. Instead, we advise our clients to purchase new or newer properties instead: Currently we don’t advise purchasing any properties built before 2005 (with some very rare exceptions). The reason behind this is that in a recently built home all major systems are also recent therefore less prone to breaking. Buy new (or newer) and avoid most issues that come with older properties.

Property Management Tip 2: Screen your Tenant well

This has to be both the simplest and most important property management tip in this list.…

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How to find a great investment property

June 30, 2011

Last week, I was having lunch at Houston’s in the Galleria with an old friend that I hadn’t seen in a while. After some catching up, he revealed that after 15 years of two steps forward three steps back, his retirement had grown by just $10K. Not good. So, he was strongly considering investing in real estate long term (good call!) but just didn’t know where or how to start. That’s all the invitation I needed – The notepad was out and over the next two hours (that felt like 15 minutes) I laid out what I thought was the right strategy for his goals. I could see the “gears” in his mind spinning faster than the RPMs on a Maserati. It all made sense to him. Then he asked THE question: How do you find a great investment property? It’s a great question I get every single time with an investor that’s just starting out. The following is my response to that question.

At the heart of it, the answer is based on supply and demand. Essentially, you are trying to purchase an asset (supply) that will generate rental income based on how desirable it is to prospective tenants (demand). So the answer will depend on the answers to the following questions:

What are tenants looking for in a property to lease?

Try putting yourself in a tenant’s shoes for a moment. Why are the reasons you are making the move from an apartment (or living with family) to a home?…

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How to buy your first investment property

How to position yourself to buy your first investment property

June 24, 2011

In this series of posts, I will show you step by step, how to buy your first investment property. Consider this your guide to find the right investment property for you, analyze it in depth and invest in it the right way. First, we will discuss the preliminary steps you need to take to set the correct expectations and position yourself for your first acquisition. This is absolutely necessary considering the amount of misinformation and marketing doublespeak that’s you have probably been exposed to as we all have.

Myths and Misinformation

Truth: The majority of what folks “know” about investing in real estate comes from infomercials, reality shows and other get rich quick “proven systems”. Sad but true. Let’s quickly debunk some of the common myths propagated in them.

Best way to profit from investing in real estate is to flip houses

What usually attracts people to flipping houses is speed. The prospect of making money fast by rehabbing and reselling a distressed home is irresistible. I get that. But have you noticed how all the home flipping reality shows have all of a sudden disappeared from TV? That’s because very few people are making any money flipping houses ever since the market turned. And therein lies the rub. The problem with flipping houses is that it’s very sensitive to market conditions – when the real estate market is up, people make money. When it’s down, people can lose everything. Ever wonder why all these gurus are selling books and tapes when they could make millions flipping houses?…

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