Cash Real Estate Investments. Good or Bad?

Posted on March 23rd, 2014 by @BertDaniel with No Comments

Money Houses2014 has certainly seen major improvements in the real estate market. Home prices have finally started to rise again, but have not yet reached a peak. There are still deals to be had. In fact there’s still so many deals out there that many properties are being picked up by investors with the intent to quickly rehab and flip, or rent out. Further to that, interest rates are still very low making investment properties more profitable on the whole.

There is of course a caveat. Isn’t there always? To purchase an investment property, you must first secure a loan and to do that you’ve gotta work with a bank. Right now, despite the recovering economy, lenders are still operating with very stringent credit qualifications and as a result the lending relationship remains tense. Whether justified or not, it can still be very tough to secure a mortgage, particularly on an investment property as banks tend to see owner-occupied lending as less risky.

So, what should you do if you can’t secure a mortgage for an investment property? If you’re thinking about using your own cash, read this first!!

Time Value of Money

There’s this little principle economists like to consider when looking at the value of an investment and that is how much will your dollar be worth next year, or the year after that, and the year after that too? The value of money at a given date in the future must take into account the amount of interest earned or inflation accrued over that time. So if you use your own cash to purchase an investment property you are essentially loaning the cash to yourself at 0% interest. Given the volatility of the real estate market, there’s no telling that the dollar that you hold today will buy the same value of goods in the future.

Value Over Time

Don’t be lulled into false sense of security in property investment. Yes, the house is a real investment that could grow in value every year. But the reality of that is unclear. You should expect that at best you will see a return on your investment when it comes time to sell the property, but of course there are no guarantees. Don’t forget that the return will be offset by mortgage payments and the cost of maintaining the property to keep the investment rented. You must remember that this is a long game, and it’s always better to play the long game with other people’s money. Which brings us onto the next point…

Other People’s Money

A very good rule of thumb to live by when investing is…never use your own money. Why? None of us knows what the future holds. Putting your own capital at risk, especially if you tap out with one investment, is taking unnecessary risk for your wealth portfolio. It’s that simple.

 

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308 S Broadway, Baltimore, MD

Posted on March 15th, 2014 by @BertDaniel with No Comments

4 Bed Upscale Apartment, Available Now!  Click pic for more info…

308 S Broadway, Baltimore, MD

308 S Broadway, Baltimore, MD - For Rent- Spectrum Enterprises

308 S Broadway, Baltimore, MD

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330 Park Avenue Baltimore, MD

Posted on February 27th, 2014 by @BertDaniel with No Comments


Luxury apartment in Downtown Baltimore.  Click on photo below for more information…

330 Park Avenue Baltimore, MD – The Spectrum Enterprises

330 Park Avenue

330 Park Avenue Baltimore, MD – Click for more information…

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