Category: Income Producing Properties
December 28, 2009 ·
Income Property Investment Myths
Why aren’t more people investing in income properties when it’s the most lucrative, safest choice in history? Good question. Probably because people would rather watch television than improve their financial condition. Sure, everybody says they want to get rich but what are they actually doing about it besides flapping their gums?
Talking wistfully about something you have taken no action to achieve is called whining. Don’t go into the Green Parrot Bar in Key West with that attitude. It’s an official ‘no sniveling’ zone.
So let’s take a quick peek a some of the more common excuses people use to not get wealthy in real estate.
Reason #1 – “I don’t have enough cash.”
Sorry. Not a legitimate reason. Find a great deal and cash will find you. Negotiate the purchase price! Take equity out of your home – it’s losing value by the day in there anyway! Have you looked into the sweet $5,000 down deal Platinum Properties Investor Network has arranged in Atlanta? Next!
Reason #2 – “I don’t have any time.”
Sorry. Everybody’s got time. You need to prioritize. We’re talking about your financial future here. Surely, it’s more important than three hours of slumming in front of the television or computer. Toss the kids and spouse in the car on a Saturday afternoon and cruise the neighborhoods looking for ugly houses for sale.
Reason #3 – “Everyone says this stuff doesn’t work.”
Everyone? Ask Donald Trump, Jason Hartman, or Steve Wynn. True, you’re probably getting a skewed perception of reality if your primary source of information is late night tv. This stuff does work when you do it right.
To learn how to do real estate the right way, check out www.JasonHartman.com for The Complete Solution For Real Estate Investors™
Reason #4 – “Realtors are a difficult bunch.”
This is very NOT true when you work with Platinum Properties Investor Network. Our local area managers are real estate agents who LOVE to work with you. If they don’t, we quit sending them business and, believe us, they want our business.
Reason #5 – “I might lose money.”
Real estate is way safer than the stock market. It’s funny. The pattern we’ve noticed over more than two decades in this business is, the more you education you get, the less risky real estate is. It’s a calculated risk, one you can control much better than Wall Street.
Reason #6 – “I don’t know what to do.”
You don’t need to know it all. You just need to know who to ask. Don’t let analysis paralysis get in the way of the rest of your life. It’s that important! Come to a Platinum Properties Investor Network seminar, then set up an appointment with one of our expert investment counselors and then do it. Pull the trigger. Buy your first property. We’ll hold your hand if needed and advise you every step of the way.
Had enough myth-busting for one day?
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December 15, 2009 ·
In this video, discover the properties investment opportunities available in San Antonio, TX. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 14, 2009 ·
In this video, discover the properties investment opportunities available in Orlando, FL. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 11, 2009 ·
In this video, discover the properties investment opportunities available in Kansas City, MO. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 10, 2009 ·
In this video, discover the properties investment opportunities available in Houston, TX. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 9, 2009 ·
In this video, discover the properties investment opportunities available in Denver, CO. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 8, 2009 ·
In this video, discover the properties investment opportunities available in Charlotte, NC. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 7, 2009 ·
In this video, discover the properties investment opportunities available in Biloxi, MS. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 6, 2009 ·
In this video, discover the properties investment opportunities available in Austin, TX. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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November 2, 2009 ·
Property Highlights:
- Columbia, SC
- 5 bedroom University of South Carolina student housing
- FIRST year lease GUARANTEED!
- Total ROI with tax savings – 20%
This 5 bedroom, 5 bathroom student housing facility is a great deal you do not want to miss. Located in a private, gated community of Craftsman-style cottages, these properties are the very best in student living. With outstanding amenities and security features, students will jump at the chance to live in these housing facilities only minutes from the University of South Carolina. The fortunate buyers of these properties will not only be GUARANTEED their first year’s lease, but the builder will also pay $5,000 in closing costs and $2,000 in HOA dues. Students are always going to need a place to live – why not profi t from this foreseeable reality?
Property Highlights:
- Dallas, TX
- Beautiful house with great cash flow
- Can finance up to 10 properties with conventional financing
- Total ROI with tax savings – 27%
This large, single-story home is impressive. When purchasing this home, investors have the unique opportunity to finance up to 10 financed properties in the Dallas market with conventional financing. (7 properties financed through a local lender can also be possible – that is a total of 17 properties!) The Dallas real estate investment market is very stable. It never experienced the bubble market burst in home values like many other large cities. While other markets shot up in value and are now experiencing dropping prices, the Dallas real estate investment market continues to appreciate at a healthy annual rate. With guaranteed tenant placement, 1st year property management, and home warranty included, this income property is an investor’s dream come true!
Property Highlights:
- Jonesboro, GA
- Fully rehabbed property
- Only $5,000 down
- Total ROI with tax savings – 64%
Let’s travel back in time. Remember when good income properties required only 10, 5 or even 0 percent down? These coveted numbers have not been feasible for some time… until now! Only $5,000 down will buy you this 3 bedroom, 2.5 bathroom income property in Atlanta, GA. Listed within the top 10 cities Americans are relocating to in 2009 sits this upbeat, capital city of Georgia. With a growing population of over 5 million citizens, Atlanta is home to many stillhealthy corporations, including Coca-Cola (KO), and marketing firms like Catapult New Business. To top it off, this house has a tenant in place upon purchase. Don’t miss your chance to secure your financial future with these prudent income properties.
Property Highlights:
- Jonesboro, GA
- Fully rehabbed property
- Built 2007
- 5 bed, 3 bath
Like-new house that is in a new neighborhood. The builder still has homes for sale. The house is the first house on the left when you pull into the neighborhood. Built by the third largest private home builder in the country.
http://www.JasonHartman.com
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October 26, 2009 ·
What’s In a Deal? – Pro-Forma Analysis of Platinum’s Hottest Properties
One of the greatest services that Platinum Properties offers (for free) is to deliver Pro-Forma analysis of pre-screened real estate deals. These Pro-Forma summaries are constructed using the Property Tracker software suite, and communicate a wealth of useful information about the deal in question. To demonstrate the power of this tool, let’s examine one of the low down payment deals in Atlanta.
In the upper part of the Pro-Forma, you will find the location of the property along with the bedrooms, bathrooms, and square footage. The summary also includes the estimated purchase price and market value, along with the estimated down payment. In this case, the house is a special deal where the investor can purchase for only $5,000 down with a “two-step close” that involves purchasing the property and then immediately refinancing it to get into the deal for much less down than is typical.
Other useful figures on the Pro-Forma are the estimated loan fees, closing costs, and rehab costs to get the property ready for renters. These items are added up to estimate the total cash requirement for the investment, and are displayed next to the cost per square foot and forecasted rent per square foot. As you move down the left hand side of the summary, you will see the forecasted monthly and annual rents, expenses, cash flow, and net performance.
One of the most important things to note is how Platinum Properties uses very conservative assumptions in constructing its Pro-Forma analysis. First of all, Platinum always incorporates the impact of vacancy in the rent income projections. Many other (and less ethical) sales organizations fail to account for the fact that finding new renters can sometimes take time, and will inflate the income forecast for their deals by neglecting to incorporate the impact of rent vacancy. Furthermore, Platinum only forecasts value appreciating at 6% per year, which is slightly below the long-term average rate of real estate appreciation. This is purposefully done to avoid presenting deals that are heavily dependent on appreciation, and is fully consistent with the Platinum philosophy of only investing in properties that make sense on the day you buy them.
Looking over to the right side of the Pro-Forma, you will see the estimated loan information, as well as financial indicators. The indicators provide a highly valuable barometer of the characteristics implicit in the deal. The first item in the indicators section is the debt coverage ratio, and demonstrates the extent to which net operating income for the property can cover the debt expenses. It is worth noting that this ratio has somewhat limited value, since it is highly influenced by the down payment amount. (More equity = less debt = better coverage.) At the Financial Freedom Report, we like to carry more vs. less leverage, since more leverage lets us invest our available cash in more deals.
The next two items on the Financial Indicators section are the Annual and Monthly Gross Rent Multiplier. What these numbers show is the ratio of the purchase price relative to the annual or monthly rent. The importance of this ratio lies in the fact that it demonstrates the extent to which the property produces an attractive amount of rent revenue. When this ratio is low, it means the property generates a large amount of revenue relative to its price, and vice-versa when the ratio escalates. We can clearly see that the price for this deal is seven times the annual rent revenue. Practically speaking, this is an attractive rent multiplier since it means that the gross revenue collections will be equal to the purchase price in seven years. Bubble markets frequently have Annual Gross Rent Multipliers in excess of 10, with some going above 15. Needless to say, we do not advocate investing in markets that produce cash at such a low rate.
The next item is the Capitalization Rate or “Cap Rate” as it is frequently referred to by realtors. The Capitalization Rate indicates the Net Operating Income as a ratio of the Purchase Price for a property. It is important to note that the Cap Rate does not incorporate the impact of debt servicing, and only shows the rate of operating cash flow you would experience with no leverage. (Did we mention that we love using leverage to increase the total returns of our investments?)
The next item on our list is the Cash on Cash Return. When investing in a flat or declining market, this can become one of the most important indicators for a deal. The reason for this is because it measures the annual net cash flow as a ratio of the total cash invested. Practically speaking, this shows the rate at which your initial investment will generate cash, with no value appreciation incorporated. In finance, there is a popular statement that “Cash is King” . . . that sentiment is no less true in real estate. It is also worth mentioning that if you can reduce the amount of initial cash invested while still maintaining positive cash flow, your Cash on Cash Return will rise dramatically. This happens because you are lowering the amount you need to invest in order to capture the rental income. Needless to say, we like this strategy quite a bit.
The last two items on the Indicators section is the Return on Investment (ROI) and the ROI with tax savings. This represents the total value you are capturing as an investor when looking at cash flow plus future appreciation in relation to the amount you initially invest.
This is the place where leverage has a BIG impact, because it lets you capture more appreciation for less initial cash. It is important to note that appreciation can be very volatile and is not captured until you sell or refinance the property. However, in the long term, a dollar of cash flow and a dollar of appreciation are the same money. Because of this, we like to look at the total ROI of our investments as the primary indicator of their long-term prospects. In this case, the extremely low down payment required catapults the ROI into the stratosphere with an astounding 77% return on investment after tax savings!
The final section that you will find is the key assumptions and comments. This is shown to be clear in the way that the Pro-Forma is built so that investors can judge the quality of the estimates for themselves. Thus, we have seen that the Pro-Forma is a very powerful tool for evaluating deals, and Platinum Properties provides it for free to prospective investors. By learning to read, understand, and act on the information contained within these summary sheets, investors can generate tremendous amounts of wealth that will allow them to realize their dreams.
Podcast: Download
October 15, 2009 ·
Patrolling the Plastic: Keeping Track of the Consumer 
Credit Market (From the Chart Store Weekly Chart Blog for the week ending July 10, 2009)
Analysis of the total consumer credit outstanding shows that the last 10 years, the total consumer debt outstanding as a percentage of disposable personal income has rounded the hump from its all-time high, and is retreating downward. The recent credit market disruption has left many people deleveraging their debt positions, and is pushing this index down further. Unfortunately, the average amount of consumer credit outstanding is still very high relative to the average of 17.5% from 1959 to 1994. Much of the economic expansion in the late 1990s and early twenty-first century was based on debt-financed consumption.
The resultant debt bubble has compromised the ability of many families to continue with their prior spending habits. In practical terms, this means that a prolonged period of adjustment is very likely as consumers slowly move toward a sustainable equilibrium of credit that is nearer to the historical average. This period of adjustment is very likely to result in a downward shift in spending patterns, as well as the observed level of prosperity for the average consumer. Prudent investors should position their portfolios so that they control assets like entry-level rental housing that will be in demand by people who are adapting to the reality of living more modestly.
Non-Dollar-Based Assets Will Rock Your World (From the JasonHartman.com blog)
We’ve been talking a bit lately about how, in our humble opinion, the dollar is poised for a headfirst plummet off a very high cliff. When it does, get ready for the cloud of dust slowly rising up into the sky, just like in the Roadrunner cartoon when Wile E. Coyote makes yet another serious error in judgment.
It doesn’t take much pondering to arrive at the conclusion that a good place to be when the currency crashes is – drum roll, please – OUT of that currency. You need hard, tangible assets. Like commodities? Yes, but probably not what you think. Running out to buy gold and silver is better than Wall Street stocks and bonds, but you can still do much, much better if you turn to income property investing.
After all, what is a structure on land besides a collection of basic commodities like copper, wood, brick, etc? We call it Packaged Commodity Investing™, and this is one (perhaps the only way) to survive the coming fiat currency implosion with your wealth intact. Can you imagine actually being able to create wealth while others around you, especially those who stayed in stocks, are being turned into paupers overnight?
People will still need a place to sleep at night and you will own the pillows. This is how to position yourself to become wealthy in the future. Own something of real value, like real estate. Companies come and go with frightening regularity off the stock market indices. Terra firma beneath your feet? It’s probably going to stay.
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October 8, 2009 ·
At the end of 2008, Sara informed me about an REO property in Indianapolis that was built in 2004, and available from the bank for a very attractive price. The only hitch was that the property needed some rehab and repairs. (Go figure – owners who get foreclosed on don’t always take the best care of their houses.)
In this case, the agreed-upon price from the bank was $57,000. To finance this deal, I worked with a mortgage broker from Wells Fargo that was referred to me by Sara. Since this was a low dollar loan, 20% down plus closing costs only came to $12,000 that I needed to bring to the table at closing. The bank sent the documents via overnight express and I signed them in the presence of a notary public, then returned them with the cashier’s check.
At this point, the area specialist became my best friend and greatest asset in closing the deal. (Her name is Angela, and if you do business in Indianapolis, I highly recommend that you talk with her . . . she regularly goes above and beyond the call of duty to get the job done.) Not only did the she help me to line up a property inspection and homeowner insurance, but she also put me in contact with contractors to do the rehab work, and stopped by the property during the rehab to keep tabs on the progress. My experience with Angela and all of the other people involved was so positive that I have subsequently decided to pursue another deal in the Indianapolis area. (Repeat business for all of the parties involved!)
Once the rehabs were completed, it was time to contract with a property management firm and rent the property to tenants. This is yet another way that the Platinum network created value for me . . . The property management company offered a rate discount to customers from Platinum, because of all the referrals that have come in from Jason’s organization.
The net result of all this work is a 3 bedroom, 2 bathroom house that rented out for $1,050 per month on a 12-month lease. The total cost including rehab and repairs was $69,000, and my monthly mortgage payment (including tax & insurance) is a whopping $460.57 per month. This results in a 1.5% rent to value ratio, and quite a bit of monthly cash flow. (In keeping with Jason’s “Refi Till Ya Die” strategy, this cash flow can be used to refinance the property and pull out cash for investing in more properties.)
One of the most important aspects to the “Complete Solution” offered by Platinum Properties is the properties that you do not see. The reason the properties you don’t see are so important is because Jason’s team frequently fields requests for low-quality deals that are rejected before their clients ever see them. The diligence and steadfast dedication exhibited by the team at Platinum Properties allows investors like myself to view an assortment of high-quality deals, without enduring the hassle of sifting through all of the “dogs” in hopes that somewhere in the pile of average and unremarkable deals there lives a diamond in the rough. By filtering the deals before they are presented to clients and investors, the team at Platinum provides a valuable service that saves an untold amount of time in research for potential investors. The best part about this process is that I am now free to spend my research time focusing on a few good deals, instead of sifting through pages and pages of marginal deals, resulting in a higher quality for all of my transactions.
The bottom line is that this entire deal would not have been possible without the network of contacts and local experts from Platinum Properties. Jason’s team has done the legwork to find high-quality people and properties in the targeted markets. Furthermore, they have pre-screened management companies to streamline the process of getting the properties occupied by tenants. Thus, the team truly creates a “Complete Solution” for real estate investors.
For more information on implementing this strategy, visit www.JasonHartman.com.
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October 5, 2009 ·
We don’t mean to scare you – well, actually we do. The words above were spoken by President Obama at a recent press conference. Ouch. Does that mean the U.S. economy is a car with a bone-dry gasoline tank still rolling slightly from 233 years of inertia?
Maybe?
A better analogy might be the economy is a car with a bone-dry gasoline tank still rolling slightly from 233 years of inertia heading off a cliff! What can we, as law-abiding citizens, expect when our government continues to bankrupt itself and devalue our currency? Seriously. The federal government is a Ponzi scheme that makes Bernie Madoff look like a piker.
Here’s a glimpse into the future after the dollar collapses:
1. An explosion in prices as Americans scramble to buy basic necessities.
2. Sparse grocery shelves and long gas lines.
3. Failed businesses and a breakdown in commerce as long-term transactions vanish due to worthless currency.
4. Rampant crime and unemployment.
5. Disappearing government services.
Sound like fun? What can you do to protect your wealth? The simple answer is to own income- producing property. It’s the only investment liable to have any value when the fiat currency collapses.
The time to act is now. There may still be time before the greenback dies as the major player on the global currency market. But there may be less time than you think. Wall Street is already coming apart at the seams from greed and incompetence. Make it a point to explore history’s best bet when it comes to investing. Platinum Properties Investor Network offers free educational services for any investor interested in weathering the coming storm. Check us out at www.JasonHartman.com.
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September 24, 2009 ·
In this video, discover the properties investment opportunities available in In this video, you will learn about Dallas, TX. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
Podcast: Download
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