The most informative, educational, no-B.S. blog about Denver Market Trends and Denver Real Estate, by the Denver House Guy himself. Period.
Tuesday, October 11, 2011
How You Can Make 21% on Your Money Right Now
I have one question for you: what is your money doing for you right now?
Is your money sitting in the jacuzi of your 0.5% savings account at the bank?
Or is your money getting sick on the zany roller coaster of the stock market?
We're going to do a little case study today where I'm going to show you, using conservative numbers, how you can make 24% on you money right now with NO headache, NO sweat, NO stress. Are you ready? Keep reading below!
Case Study Rentals are HOT right now!
No matter how many times I've already repeated it, I will continue to say it again and again, because I guarantee you 1-5 years from now, everyone will be saying, "Jonathan, why didn't you force me to buy a rental property back in 2011!"
So here it is: Buy a rental property NOW! Vacancy rates are at record lows, interest rates have NEVER been lower in history, and renters are EVERYWHERE.
I'm just going to use conservative numbers that investors would scoff at and say, "I can get much better than that" just to show you that owning a rental property and having someone else manage it WILL make you 20%-30% return on investment. Let's start.
1) Aurora and Southwest Denver have always been places investors have shark-frenzied because of 2 factors: low prices, and high rental rates.
2) But alot of people tell me, "Jonathan, the competition is too crazy. I can't compete with these cash bully-investors buying foreclosures."
Agreed. But what if you could - instead of making 40% on your money - make 25% (still AMAZING) by just going up a tiny bit in price point? It's the old nerd trick of getting away from the bullies - just go where the bullies don't care to go. If investors are spending $80,000 cash for a foreclosed house, spending $10,000-$15,000 fixing it up, and then renting or selling it and making a kill, what if you could buy a house at $110,000, get a property manager to rent and manage it, and STILL cashflow $500/month? My friend, there are still amazing deals like this out there, maybe not the slam dunk that cash investor bullies can get, but cashflow deals that still make YOU a killing that the stock market can't even touch.
3) Conservative case study in Six points:
I'm crazy, but just for the sake of argument, let's over-exaggerate ALL the factors to make sure the numbers work.
1. Price: In Aurora and Southwest Denver, there are several great and even updated 3 bedroom (for families) houses around $110,000 that are NOT foreclosures, short sales, or government owned homes.
So, let's put the price at $120,000 just to make sure.
2. Rents: There are no 3-bedroom houses in South Aurora on craigslist right now for under $1200/month. So, instead of the market $1300-$1500 rent you could get, let's just say $1200/month.
3 Mortgage: The best way to cash-flow is to use the AMAZING interest rates right now. At 5.125%, your mortgage payment would be $522.71/month with a 20% down payment. Add taxes and insurance it will be $640/month at the most.
4. Property manager: Figure the standard 10% of gross month's rent for property management fees so you don't have to get calls in the middle of the night, or deal with showings, etc (10% is my rate). That would be $120/month.
5. So, after paying mortgage, taxes, insurance, and property manager, you're making $440 cashflow per month (AT THESE OVERLY CONSERVATIVE NUMBERS!), with NO headache about tenants, NO stress about the stockmarket, and extra money in your bank.
6. What you need: $20,000-$25,000 downpayment per house. At $440/month, you will be making 21% on your investment (if we add $2,000 for maintenance and vacancy rates), or $5280/year, and paying down the loan so you can eventually sell the house, or just pay it off and make $1100/month!
Get 2 of these houses and you'll be making close to $1000/month NO HEADACHE cashflow.
-If you have this money sitting in your bank making 0.5% for you, it's time to MAKE IT WORK for you instead!
-If you don't have that much saved up yet, talk to your family, or your friends, make partnerships...you'll be surprised.
I can help you find and buy these houses, and I can manage them for you to get your money out of the jacuzzi and put it to work for you!
People will always need to rent...why shouldn't they rent from you??