TRIP TO CHATTANOOGA - EPISODE 1

Episode 1 : Our team spends a day in Chattanooga looking at off market properties, crunching numbers & showing some of the real estate deals that can still be found in today's market. We love Chattanooga for many reasons. From their rental rates, population growth, student housing, tourism and overall commerce it’s become a great place for us to invest as well as our investor clients.

If you have money you are looking to invest or have cash sitting in savings accounts, IRA's or anywhere that is not performing well please let us know. We would love to work with you.

Why Real Estate Investing should be on your New Years resolution list.

RESOLUTIONS?

It’s that time of year again. You know, the one where everyone sets goals and aspirations for their year. We ring in the new year with high ambitions and hopes for our biggest year ever but sometimes those goals never get accomplished. At SimpleHouse, we’ve seen the power of real estate investing and how it can transform people’s lives in just one year. That is why we think real estate investing should be on your resolution list.

WHY REAL ESTATE INVESTING?

There are many reasons why people invest into real estate. For most, it’s to create wealth and additional income towards financial freedom. For thousands of years, real estate has been and will continue to be one of the number 1 investment vehicles. Unlike stocks, bonds & mutual funds real estate has a far smaller learning curve while creating a tangible asset that will appreciate over time. Below are some additional reasons why real estate investing should be on your NY Resolution list.

1. Cash flow.

“Many people invest in rental properties simply because of the cash flow - the extra money that is left after all the bills have been paid. The cash flow can provide ongoing, monthly income that is mostly passive, allowing you to spend your time building a business, traveling or reinvesting in more real estate.

Cash flow from real estate is stable and far more predictable than most other businesses. That's great for entrepreneurs enduring the ups and downs of start-up life. The cash flow can help float you though the bad times and live well during the good times.

2. Tax benefits.

Let me ask you a quick question: if you earn $100,000 at your own business and I earn $100,000 through rental properties, who get’s to keep more?

That’s right: I do. Because the government rewards rental property owners.

Not only is the cash flow received from your rentals not subject to self-employment tax, the government offers tax benefits including depreciation and significantly lower tax-rates for long-term profits.

3. The loan pay down.

When you buy a rental property using a mortgage, your tenant is actually the one paying the mortgage payment, thus increasing your net worth each month. Because of the loan pay down a rental property is essentially a savings account that grows automatically, without you depositing money each month.

Today you might owe $200,000 on a rental property, but next year you might only owe $195,000 because the tenant is making the payment for you, making you $5,000 richer. Thirty years down the road, or whatever the term of your loan, it's paid down to $0. You own a significant asset that you can sell or continue renting, all thanks to your tenant paying the mortgage.

4. Appreciation.

While the loan is being paid down the value of real estate, generally, goes up. Yes, recessions do happen. Values do go up and down. People buy at the wrong time of the market.

However...

Over time, values do climb higher and higher. That's why people are not in this real estate game just for a year or even a decade but for life. They know their properties will continue to climb so that 30 years from now, everything will be worth far more than they re paying for it today.

5. A hedge against inflation.

Can you imagine paying ten dollars for a gallon of milk? Or five dollars for a candy bar? While those prices seem exorbitant to you, this is the future because of inflation. Inflation is the process by which prices increase due to the value of money decreasing.

While most people fear inflation, as a rental property owner, you will look forward to it!

When the price of a gallon of milk hits ten bucks a gallon, guess what else is going to shoot through the roof? Everything, including rents and property values! The one thing that won’t increase, however, is your fixed-rate mortgage payment. As inflation pushes the cost of living higher and higher, your cash flow will only increase. This is why real estate is often called “a hedge against inflation." When inflation hits - You’re ready!

6. Control.

Many people don’t like their future tied to a board room on Wall Street or a nervous CEO in Silicon Valley.

This is why many choose to invest most of their savings in real estate, knowing that they are the one who is responsible for their success or failure.

• If you want a better deal, you need to hustle to find it - or we will find it for you.

• If the rental market gets more competitive, you can compensate by increasing your rents.

• If values drop, you can choose to wait it out or improve the property to drive the value back up.

In other words, you get to control the situation, and your financial future, with your own two hands.

Don’t think that just by owning some rentals you are instantly going to begin building wealth. Real estate is powerful - but only if you work it right.

You must learn how to find great deals, how to evaluate a real estate investment, and how to finance any properties you want to buy. Additionally, you must treat it like a business and nurture it as it matures. It's likely not going to be totally passive up front, but as millions of individuals throughout history have discovered, the payoff is well worth the journey. “ - Brandon Turner “BIGGER POCKETS” Entrepreneur Magazine

7. Freedom

The positive cashflow from real estate acts like an additional stream of income. Overtime, as you collect more rental properties, the additional cash flow increases. For many investors, their goal is to purchase real estate as a way to supplement or replace their current income and create more freedom to do whatever it is they love. Start the business they have always thought about? Travel the world? Coach their son/daughter’s sports team? Etc.. Whatever is important to you, real estate over time, can give you the freedom to do more of that.

Like most life changing transitions real estate takes time and patience but when strategized correctly it can be transformational.

We hope you enjoyed this post. Please do not be afraid to comment below or message us via our contact page with any questions you have. We hope this information was clear and simple. If you are interested in learning more or adding real estate investing to your 2019 resolutions please let us know, we are here to help. Joshua@SimpleHouseRealEstate.com

House Hacking 101 : A hack to living for free and getting paid to do so.

HOUSE HACKING

There are many ways to invest in real estate. For most, the goal is to cover your expenses while creating additional income. House Hacking is a unique way to do just that. The question is, what is house hacking and how can you use it to create financial freedom in your life?

WHAT IS HOUSE HACKING?

House Housing is purchasing a property to live in while also using a part of the home to generate income. One example would be be renting out portions of the house to cover your mortgage. For instance, you can purchase a single family home and rent each room out for a set monthly rent or create a space for an Airbnb rental. Another option is purchasing a multi family property such as a duplex, triplex or quadplex. We like to call these “Owner-Occupied Multi Family Properties.” It’s owner occupied because you plan to live in it. The idea here would be to purchase a property live in one unit and rent each additional unit out to pay the mortgage which allows you to live for free. In many cases, you can even create additional income each month. House Hacking is a great option for first time investors.

Let’s break down the numbers even more.

HACKING THE NUMBERS

By purchasing a small multifamily property, the rent that your tenants pay each month can cover all of the expenses for the property – and more.  For example, if you buy a quadplex (4 total units), live in one unit and rent each of the other units out for $600 a month, you could be making $1800 per month in gross income. If your loan, taxes, insurance,  utilities, and other expenses come to just $1200 a month – you would generate $600 a month just to live in the home.  Even better- when it comes time to move out into your future home, you can rent that 4th unit out for even more income.

FINANCING YOUR HOUSE HACK

The easiest way to purchase any property is with cash. However, chances are — you are not able to cut a check for hundred’s of thousands of dollars. In this case, you will need to acquire a mortgage. Don’t let that overwhelm you — the process is far more simple than you think and that’s what we are here for.

With any loan, you are going to need to supply a certain amount of money to get the loan, known as the down payment.  One plus side to House Hacking is that you will be living in the property which means it will be owner-occupied. Owner-occupied means you will be purchasing the home as a primary property which allows for lower down payment options such as 3.5% or 5% down payment all the way up to 20% or more. **rule of thumb : the larger the down payment the lower the monthly mortgage payment.

The best way to determine which loan suites for your deal is to speak with a qualified mortgage professional at your local bank or credit union.  If you need help, we have some amazing recommendations to help you get started.

WHO SHOULD HOUSE HACK?

House Hacking is not for everyone. In fact, it takes hard work and dedication. After all, you are creating steps toward early retirement. A House Hacker should understand they are becoming a landlord. Like owning any property the owner should understand the work it takes to get your property in “rent ready” condition, screen tenants, process payments, pay all monthly expenses and keep the condition of the property maintained. It is HARD WORK! However, it can be a phenomenal way to kickstart your investing and acquire more units in a shorter amount of time. The more units the more passive income you create. House Hacking is best suited for someone who is motivated by the financial freedom it can provide.

MANAGING YOUR HOUSE HACK?

After closing on the purchase of your small multifamily property, you are now a landlord! At this point, it is imperative to learn how to be a landlord – and start running your business like a business – not a hobby. Read a few books on being a good landlord, make friends with local investors that you respect, read blogs that talk about landlording, and don’t stop learning.

Being a landlord is not as difficult as the horror stories you may have heard of – if you follow some very simple guidelines:

• Screen your tenants like you would a job applicant. Keep your emotions out of it and look at the facts. For an exhaustive guide on the best way to find awesome tenants, check out The Ultimate Guide to Tenant Screening.

• Have a written policy to refer to. Stick to your policy when dealing with tenants.

• Outsource things you don’t want to do. If you don’t want to fix toilets – don’t fix toilets. Find handymen, property managers, or others who can handle the aspects of the job you don’t want to do. If you found a great deal when you bought your property (which you should have!) the cash flow can pay for these things.

• Treat your business like a business, not a hobby. Set up processes and systems to handle the problems that will arise.

Being a landlord is not always the most fun activity, but by following these simple guidelines the process can be much easier and your problems minimized.  There are over twenty million landlords in America, so you are not alone in your journey. If you run into any problems, just ask those who have come before for help and you’ll find most seasoned landlords are more than willing to help.

ADDITIONAL HOUSE HACK NOTES

• After living in a house hack property for one year you are able to rent out all units and get re-qualified to repeat the process again

• A house hacker should be comfortable paying the entire mortgage assuming the units are vacant. This ensures you do not put yourself in a difficult financial situation if your units ever find themselves empty for a period of time.

• All numbers are for example purposes only. For the most accurate information speak with a qualified mortgage professional at your local bank or credit union.

• Because you are living in the property the property will be a “primary residence” which allows for lower down payment options. You do NOT have to put 20%+ down. Best to speak with your lender or bank for more options.

We hope you enjoyed this post. Please do not be afraid to comment below or message us via our contact page with any questions you have. We hope this information was clear and simple. If you are interested in learning more or finding House Hacking style properties please let us know, we are here to help. Joshua@SimpleHouseRealEstate.com