My favorite real estate investment strategy is to buy a property and hold it long-term. I prefer this strategy because it’s a great way to build long-term wealth. 

Some people prefer flipping properties, but that means you end up paying thousands of dollars in capital gains taxes. Long term buying and holding requires fewer taxes on your capital gains due to monthly depreciation. 

When you look for investment properties, look for positive cash flow. Positive cash flow is the difference between your monthly expenses and what you receive in rent. For example, let’s say you spend $1,500 in monthly expenses on a property and you collect $2,000 in rent. That means you have a positive cash flow of $500 each month. 

Even if a property is in a bad area, if it has positive cash flow, I would take it. There might be a property in a better area available, but I wouldn’t take that property if it just means breaking even or spending more cash out of pocket on a monthly basis. 

 

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Invest in real estate to get out of the rat race.


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Investing in real estate is a good way to play a game that I like to call, “Getting Out of the Rat Race.” I learned this philosophy from Robert Kiyosaki, author of Rich Dad, Poor Dad. The whole purpose of the game is to have your monthly residual positive cash flow on all of your properties exceed your monthly liabilities. 

Let’s say you have $1,500 in assets but $4,000 in liabilities. That’s a difference of -$2,500. The purpose of the game is to increase your assets to the point where they equal or exceed your monthly liability. In this case, you would have to own eight properties with a positive cash flow of $500 a month in order to match your liabilities. 

Once they match, Kiyosaki says you are out of the rat race because even if you stopped working, all of your liabilities would be paid for on a monthly basis. Take a look and see what your monthly residual income is and start working to get out of the rat race. 

If you have any questions about investing in real estate, just give me a call or send me an email. I would be happy to help you!