1. HIRING THE WRONG VENDORS
Hiring unqualified contractors can cost both time and money…important to generating wealth from real estate. Many contractors don’t understand investment real estate. Work with those that do.

2. SEARCHING FOR DEALS BY YOURSELF
Novice investors burn up hours of time and gallons of gasoline looking for deals. The best deals find their way to wholesalers and real estate agents that specialize in investment properties. Build a team of agents that know you and what you’re looking for.

3. HIRING PROPERTY MANAGERS
The cost of outside property management can improve cash flow and lets you do what you do best.

4. OVEREMPHASIZING CASH FLOW
Make money by acquiring equity, asset appreciation and cash flow. Don’t miss out on large equity and appreciation gains by looking only at cash flow. The secret to real estate wealth is acquiring appreciating assets.

5. MINIMAL CASH RESERVES
Keeping less than a 3 month cash reserve for each property owned creates a problem for investors who can’t weather a vacancy or a delay in section 8 payments. Keep a little more cash on hand for emergencies.

6. WAITING TO TRANSFER UTILITIES
This is a simple mistake that gets investors every time! They wait until closing to transfer the utilities into their name. They find extra reconnection fees and days of delays when they need contractors in their house!

7. RUSHING TOO FAST
Don’t fall for the quick buck schemes. Wealth comes from a solid plan and property appreciation over time. Don’t count on finding a “steal”, taking advantage of vulnerable sellers at closing or any of the other schemes you read about.

8. ACQUISITION WITHOUT DILIGENCE
Make money when you buy the right property. Buying the wrong house can cost an investor dearly. Take the time to do your homework on each property. Make sure you’re buying the right type of property in the right area for the right price. A little extra diligence up front can save you thousands of dollars and help you reach your goals faster.

9. SPENDING TOO MUCH CASH UP FRONT
The key to building wealth is acquiring multiple properties. The less cash you put up front, the more properties you can purchase. We have access to special financing to minimize their cash out of pocket and allow them to buy more houses and increase their profits.

10. PROCRASTINATION
Too many good investors drag their feet too long and allow their fears to keep them from making money. In real estate, there is only one thing for sure. If you don’t buy a property, you won’t make any money. Take the first step.

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For prompt, courteous, professional service, call Bruce Lessey:
Office: 1-(713)-623-8899
Direct: 1-(832) 654-5670

Have questions, need advice you can count on or just want to discuss this further? Don’t waste any more time; pick up the phone and call me now! I’m here to help!

I appreciate you as a client and a friend. I appreciate your business, your loyalty, trust and your referrals. It is my goal to provide the very best counsel, advice and service possible for your real estate needs. If I may ever be of assistance to you, a relative, friend or co-worker please don’t hesitate to call me. I look forward to the opportunity to serve you. ™

Sincerely,
Bruce Lessey
“Your Houston Associate Broker”

Purchasing a rental property may be for you – especially in today’s real estate market – if you are looking for a way to increase your personal wealth.  Of course, we can’t expect sky-high appreciation rates all the time and one thing about real estate, particularly land, they’re not making it any more! With the continued increase in population and area growth demand, values will continue to increase. And how many times have you heard someone say, I wish I had bought property back when prices were low?  Today we must look at a residential market in which a well-chosen, well-managed rental property of one to four units can be the “shining star” in any investor’s portfolio.  The key to success is doing your homework and making sure that the numbers work in your favor.  If you bought your own home, you already have realized the financial advantages of real estate ownership.  Here is a brief overview of the many ways you can profit from owning rental real estate today.

1. Investment properties can lower your taxes.

Investors tax incentives can be substantial.  Some investors can use deductions from rental property assets to offset some of their wage income.  Other investors, while not eligible for the offset, can avoid owing taxes on their rental income by showing adequate expenses and deductions.  Even if rental payments do not cover the investor’s expenses, tax breaks may actually make up the difference or more.  As an investor, you can claim deductions for actual costs you incur for financing, managing, and operating the rental property.  That means mortgage interest payments, real estate taxes, insurance, maintenance, repairs, property management fees, travel, advertising, and utilities if not paid for by the tenant, can all be deductions.  All can be subtracted from your adjusted gross income when figuring your personal income taxes up to  the amount of real  estate  income you receive.   Also, don’t forget about depreciation.  The tax code assumes buildings and improvements wear out over time.  These losses are deductible from income, regardless of the property’s actual market value.

2. Have a positive cash flow.

Positive cash flow results when the rent you receive exceeds the total you pay for the mortgage, taxes, insurance, maintenance, and other costs.  That’s not at all as hard as it sounds.  First, decide whether you need a positive cash flow before or after taxes.  A pre-tax positive cash flow translates into current income, a goal of many retired investors and others with current expenses.  Properties yielding a pre-tax positive cash flow are harder, but certainly not impossible, to find.  Be aware that not all properties will yield rental income which is high enough to cover your expenses.  Make sure you know how much rent to expect by researching rents for similar units nearby, the property’s current rental fee, and that of the last increase.

A positive after-tax cash flow can come from a negative pre-tax cash flow.  Generally, the depreciation deduction makes up the difference.  If you meet the eligibility test, you’ll be able to use the depreciation to shelter some of your taxable income and reduce your tax bill.  Second, you’ll want to ensure your tenants make timely rent payments and take care of the property.  Of course, a positive cash flow is impossible without income.  A thorough credit, employment and landlord check of any potential tenants is a must and will help you track down the best renters.

3. Use leverage.

As an investor, you magnify the returns on your investment by borrowing a large part of the purchase price using the bank’s money! That is, by limiting the amount of cash you invest, you make your cash go farther.  Leverage means using borrowed money to increase equity.  And equity – the difference between what the property is worth and the balance owed on the mortgage – is what’s important when figuring out whether your dollars are wisely invested.

4. Benefit from growing equity.

Even at a modest rate of appreciation, real estate will yield a higher return on the cash investment than most other financial investments, such as bonds or long-term CD’s.  Each mortgage principal payment you make is a payment to yourself.  You build equity as your mortgage principal is paid down, even if your investment property doesn’t increase in value.  Although homes in different parts of town may appreciate at entirely different rates, the key is to have a knowledgeable professional carefully guiding you through the steps.  Know how much equity you have and learn to use it to leverage into other properties; then watch your real estate portfolio and your personal wealth grow!

Choose your agent wisely. Working with a full-time professional real estate agent is a must.  Choose your agent by asking questions of him or her.  Find out how knowledgeable they are about houses currently for sale in your price range and also of houses that have recently sold.  Does your agent work with a good lender that has the reputation of excellent service and low rates to assist you in obtaining financing?  Does your agent ask questions of you in order to have a full understanding of what you are looking for and to help you to find the best property for you?

For prompt, courteous, professional service, call Bruce Lessey:
Office: 1-(713)-623-8899
Direct: 1-(832) 654-5670

Have questions, need advice you can count on or just want to discuss this further? Don’t waste any more time; pick up the phone and call me now! I’m here to help!

I appreciate you as a client and a friend. I appreciate your business, your loyalty, trust and your referrals. It is my goal to provide the very best counsel, advice and service possible for your real estate needs. If I may ever be of assistance to you, a relative, friend or co-worker please don’t hesitate to call me. I look forward to the opportunity to serve you. ™

Sincerely,
Bruce Lessey
“Your Houston Associate Broker”