Frequently Asked Questions
Why should I invest in real estate versus the Stock Market?
A: According to a January 1, 2003 article in Newday: - "Analysts say that investors have lost nearly $8 trillion since the stock market peaked in the Spring of 2000.
"Mutual fund's in 2002 lost 20.25% in equity funds and 96% of all stock funds lost money," according to Lipper, Inc.
2003 article in Kipplinger states that "stock market losses worldiwde 2000-2002 were $13 trillion. This translates to $2,000 for every single person on the planet.
During a rough time in the economy that the United States is facing today this still holds true. The stock market is considerably more volatile than ever before and investor's are pulling their money out of stock and putting it into something REAL, Real Estate.
How did all these people make millions in real estate?
1. O.P.M. - Use Other People's Money to leverage your own investment capital.
2. Never Sell - Hold the real estate investments long term.
3. Run a Tight Ship - Treat investing like a business, get good at it and run it efficiently.
4. Be Consistent and Persistent - Repeat steps 1, 2, and 3 above over and over again.
The secret to real estate can be summarized by this equation: A + A = E - which stands for APPRECIATION + AMORTIZATION = EQUITY
Appreciation - an increase in price over the value of time.
Amortization - the gradual elimination of a liability, such as a mortgage, in regular payments over a specified period of time
Equity - the value of a property minus the owner's outstanding mortgage balance.
"97 out of 100 self-made millionaires in America made their money through real estate investing." - Fortune Magazine.
How much money can I actually make in Real Estate?
If you purchase just 1 new investment property per year for 20 years, you will have realized $3,400,000 in equity.
If you purchase just 2 new investment properties per year for 20 years, you will have realized $6,800,000 in equity.
If you purchase just 3 new investment properties per year for 20 years, you will have realized $8,900,000 in equity.
Finally, if you purchase just 4 new investment properties per year for 20 years, you will have realized $13,700,000 in equity.
*Based on a $100,000 home appreciating at 5% per year, with a 20 year amortized mortgage.
Once you have gained all this equity over the years, there are various exit strategies for you as an investor.
1. Liquidate each property and receive a check for the total amount of money you have in equity and retire.
2. Take out a Home Equity Loan on each property and still continue to rent the properties and continue to cash flow and receive numerous tax deductions each year.
3. Leave the equity in the houses and continue to use the cash flow from every month to pay your salary each year.
What kind of tax advantages can I receive by Owning Rental Real Estate?
You can depreciate the structure (not the land) as if it would be worth nothing at the end of the 27.5 years! Of course we allknow that the property will probably be worht much, much more in 27.5 years than it is now - not less. Nevertheless, on a $100,000 house (assuming, for example sake, the structure is worth 80% of the total) we are allowed to write off nearly $3,000 in depreciation alone each year.
Other tax advantages are available to real estate investors for interest, property taxes, insurance, repairs, inspections, etc.
How do I get started?
With Capital Equity Investments, getting started in Real Estate is as easy as 1 - 2 - 3.
1. Get approved for real estate investor financing; (Capital Equity will provide you with a direct lender)
2. Start looking at wholesale priced investment property opportunities provided by Capital Equity Investments;
3. Select your 1st investment property and be on your way to financial freedom.
