Paul Miantona, Realtor

07/13/2022

09/01/2017

Is Investing in Real Estate Profitable?

When you buy a stock, the only way you can make money is if the stock appreciates in value, and you sell it at the good time. With real estate you can make money in many ways, I can name 12 of the many ways:

• Rental income. That one is the main source of profit investors are going for when buying a rental, and doesn’t need an explanation.

• Buying low. You turn an instant profit if you manage to buy a property for under market value. Think foreclosures, quick sales, and awesome negotiation skills.

• Selling high. You can make extra money if you stage the property to attract buyers over market value. With stocks, you always buy and sell at market value. With real estate, you can try to beat the market.

• Increasing equity. If you take a mortgage to finance a rental, you are increasing your equity with every mortgage payment.

• Leverage increases returns. If you put 20% down on a property, you will still receive rental income based on 100% of the property value, making it a great return for your 20%. Say your property is worth $100,000 and you charge $750 in rent with $500 in mortgage, taxes and fees. You have a $250 profit on $20,000 down. That is $3,000 a year, or a cool 15% return on your deposit. Good luck trying to get an almost guaranteed 15% on stocks.

• Leverage makes you profit on the full selling price. If that same $100,000 property you bought with $20,000 down sells for $120,000 a few years later, you get your $20,000 plus principal payments back, and a $20,000 profit. It is only a 20% profit over the full value of the property, but thanks to your leverage, you are making a profit of 100%, minus principal payments to the $80,000 mortgage. The bigger the leverage, the greater the return.

• Renting smaller units. If you rent three rooms by the room, to three tenants. You can charge more than if one family was renting the whole place. You can divide your family house into a duplex or a triplex and increase the rent.

• Renting to businesses. Businesses are a different type of tenure and rents are generally higher. They are also safer if you choose a well-known business to rent to.

• Tax benefits on interest. Depending on your country of residence, you can often deduct the mortgage interest from the rental income, and create a tax-free profit.

• Tax benefits on improvements. You can also deduct the cost of the improvements from the rental income, while the added value to the property is yours to keep.

• Profit from a lump sum on a refinance. So you bought your $100,000 place, and put $10,000 worth of improvements, that the tenants paid back with rents. The property is now worth $125,000 because your contractor did a great job, you can refinance to get the $25,000 cash and put 25% down on your next $100,000 rental!

• Profit from extra cash flow on a refinance. If you are able to refinance the property to lower your mortgage bill payments while the rent stays the same, you are generating more cash flow every month. You can build a cushion for maintenance, save up for a deposit on a new rental, or have more passive income to live off.

Based on these facts and many more, there is no doubt to say that investing in real estate is more stable and profitable than investing in the stock market.

Call Paul @ 763-516-8017 and/or email: [email protected] if you have any further questions.

08/29/2017

https://www.youtube.com/watch?v=rPWY5uHtpq0

The real estate market is soaring, as more than 5.25 million existing homes were sold last year. That's the most since 2006. It’s driving buyers to Zillow, t...

08/28/2017

The Advantages in Buyer verses Renting

Buying a home has always been built into the American dream, but in the wake of the housing crash, a new generation of homebuyers is treading more carefully.

While renting is more flexible, buying a home has the bigger potential long-term payoff, with tax advantages and quality-of-life benefits. Comparing the costs of buying are more varied and complicated than for renting, so it's important to look beyond just the numbers when making your next move.

You Put Down Roots When You Buy a Home
Although it's better to rent if you won't be staying long or if your plans are uncertain, that kind of flexibility comes with a price. It's harder to feel established in a neighborhood if you aren't a homeowner. Linda Lewis has been a real estate agent in Walnut Creek, California, for 29 years, and she says the main thrill of selling houses is watching people put down roots.
"When clients buy a house," she says, "they settle in and create a community." An added benefit, she says, is that you have the right to paint the bathroom or put in a rose garden without asking permission.

Home Ownership Is a Built-In Savings Account
As Dorothy repeats so often during her stay in Oz, there's no place like home. It's true even if you only have eyes for the bottom line. When you buy a home, you enroll in a forced savings plan. No matter how tight your budget may be, you find the money to make your monthly mortgage payment.
Month by month, you pay down the mortgage and increase your equity — the amount of money you can sell the house for less than what you still owe on it. Over a lifetime, home ownership helps you build wealth.

Buying a Home Has Big Tax Advantages
When you decide to buy a home, you can count on your uncle's support — Uncle Sam, that is. The significant tax benefits of buying rather than renting may be reason enough to invest. Homeowners can deduct mortgage interest on their federal income taxes.

This is a hefty deduction for many people because interest payments are often the largest part of a mortgage payment in the early years of owning a home. You can also deduct some closing fees and your property taxes.
Paying a Fixed Mortgage Stabilizes Your Budget
As anyone who has rented a home knows, rent hikes are the norm and often out of your control. If you're in an area without rent control, the landlord can raise the rent whenever he or she likes.

Even with rent control, there are exceptions and you can't count on your rent remaining stable. If you buy a home and take out a fixed rate mortgage, your house payment stays the same for the life of the loan, whether it's 15 or 30 years.

Buying a Home Costs Less than Renting Over Time
Buying is the cheaper alternative over the long term. While your mortgage payment may initially be more than you'd pay in rent, you'll spend less over the life of the loan if you buy. Rents may rise over time, changing the equation. Also, given the tax benefits of home ownership, your true out-of-pocket costs from day one can be less than if you rent.

When you factor in the possibility that real estate values often go up over the years, home ownership looks even better. The cherry on top is that when your mortgage is paid off, you can stop making payments but you keep the house