Pride, Appreciation & Leverage. 3 reasons you should invest in Real Estate.

April 28, 2016

PRIDE

Investing in the right property in the right location at the right time and owning that investment property gives much more pride than owning a stock because you can actually see the property that you own. Home ownership is out of reach for most people. Imagine owning thousands of housing units instead, how much satisfaction it will give it to you.

 

APPRECIATION

Appreciation is the uptick in the value of the property over time, also known as “Equity Buildup”. Investors realize the appreciation at the conclusion of the project. Increase or decrease in property property value is often correlated with market growth, more jobs, less housing supply will assist property to appreciate faster. Other factors may help to increase property value is by performing value adding project like property Renovation which is the most common example for value add project.

 

LEVERAGE

What is Leverage?

Leverage is the use of borrowed capital to increase the potential return of an investment made by sponsor and partners.

Leverage is the biggest advantage of investing in real estate. It has the ability to buy a real estate with little money down.  Even with the increased banking regulations, we can still buy a property with only 25% - 40% down payment which gives tremendous leverage. 

ABC Rental Dallas

Purchase Price $130,000

CASH BUYOUT

40% EQUITY & 60% DEBT (LEVERAGED)

 

EQUITY

$130,000

EQUITY

$52,000

DEBT

$0

DEBT

$78,000

- DEBT PAYMENT

$0

- DEBT PAYMENT

$506 @6.75% for 30 Years

TAXES

$2300

TAXES

$2300

INSURANCE

$960

INSURANCE

$960

 

 

 

 

NET CASH ON CASH

7.30%

NET CASH ON CASH

12.05%

Above chart is an example of how leveraging in real estate can assist to increase cash on cash return, a perfect example for higher risk higher return.

 

Here at EQUITY BRICK , we gather small amount of capital (as little as $500) from a large group of people together with sponsor to invest in high yield real estate project across Texas. Simple sign up steps allow you to view and invest in our first project online with expected net cash on cash return of 6.5% + additional gain from property value appreciation. Austin market is expected to appreciate 4% yearly for the next 5 years to come.

http://www.mystatesman.com/news/business/austin-housing-market-stays-hot-sets-records-for-s/np9Kb/

 

Equity Brick is an online investments marketplace does not advise on any income tax requirements or recommend any investment. Please do your own due diligence prior to investing

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