Real estate is one of the most promising avenues for wealth generation available to investors in the U.S. and beyond. The U.S. property market offers a massive jumping off point for anyone looking to find powerful returns on investment while maintaining a cash positive disposition. Real estate is one of the few assets (perhaps the only asset) primarily bought with the help of significant credit. With the uncertainty of the coronavirus pandemic far from over, it's a good idea to leverage a powerful investment opportunity like property to your advantage.
Margins are king in the real estate business.
One significant benefit that the real estate market offers to its investors is a uniquely strong margin for returns. The ability to borrow while purchasing high-value assets gives you unique spending and return generating power. Real estate professionals, like John Foresi from Venterra Realty, cite this expanded buying power as one of the most important features of the property market. With the help of a lender, you can put down a fraction of the home price while enjoying all the benefit.
The profits on the investment are funneled directly to you as the homeowner, no matter your current relationship with a lender. This means that with the standard 20% down payment on a new home (or less in some instances), you can immediately rake in 100% of the rental income as if you owned the property outright.
Similarly, acquisitions for flippers offer this seeming discrepancy. Home buyers in this realm of property acquisitions are able to structure their home loans in a way that any profit made on the sale of the home goes directly into their next purchase—the bank repayment is simply a fixed expense associated with the ultimate sale.
Every lender is unique.
Each lender will offer their borrowers a different customer experience. Depending on the general state of your local marketplace, your own personal credit history, and any major changes to your finances over the past year or so, you may be able to take advantage of phenomenally low interest rates.
With a resource like Wealth Rocket, you can hone in on market trends and other financial data that is crucial to understanding the nuances of personal finance and everything that goes into a lender’s decision. Wealth Rocket also helps new investors understand their own personal finance issues beyond their detailed reports about financial products and services. Wealth Rocket is the secret weapon in many investors’ arsenals. Their detailed market reports and information about breaking trends in fiscal responsibility and wealth mobility are unparalleled.
In addition to savings and credit advice, Wealth Rocket can help you understand the best means of approaching a variety of different lenders. Whether you do your banking with one of the big names or a small, niche credit union that serves your specific needs, borrowing is a tricky process that involves a variety of checks and application stages that many buyers simply stumble through.
Compare interest rates for each purchase.
As you grow into the real estate market and begin to make additional purchases, it will become clear that shopping around for mortgage rates is crucial to creating the greatest profit possible. A minimal difference in the interest rate owed on your home loan can mean a massive dollar figure in the long run.
For buyers who are seeking rental income, ownership of the property over the course of many decades might be your goal, meaning a rock bottom repayment obligation while maximizing monthly contributions is essential. Alternatively, flippers typically look for minimal monthly payments in order to stave off threats to cash flow while they pump money into the investment property in the hopes of a big sale.
Understanding commercial real estate investing and your unique needs as an investor is crucial to making the best decisions for your future. Use all the resources at your disposal for maximum results.