Charlotte Property Management Blog

Sustaining, Maintaining or Building: Beyond sustaining

Sherkica McIntyre - Monday, June 19, 2017

In the first article of this series, we agreed that sustaining is no way to Build your Empire. Next, we effectively established that once you find what works for you, then perfect your method—marketing, locating renters, maintenance routine, and financial obligations and priorities are established, to name a few keys—you’re ready to set your sights on the ultimate goal…BUILDING.

You may be thinking, “Building an empire sounds so grandiose. I just want to invest and secure my/my family’s financial future.” We don’t mean to indicate that anything short of BUILDING AN EMPIRE is small time. Nothing of the sort. However, we don’t want you thinking that good enough, is…good enough. Especially, when you have it within your means, opportunity, and practice to have your portfolio and the success that it indicates reach EMPIRE level. Real estate can make you a millionaire.

That last assertion isn’t one of late night hawkers of some fly-by-night get rich scheme on your local cable channel. It is an unequivocal fact that real estate is a powerful wealth building tool that has made many a savvy investor, millionaires. There’s a catch, though. Not everyone that invests becomes a millionaire, or even a lesser level of wealthy. For some, they find their foray into investment real estate ends with stress, empty bank accounts and regret. They end up struggling, for years, never experiencing the success they dreamed of nor building the wealth that they’ve risked everything, in some cases, to attain.

So, how do you avoid the pitfalls and experience the triumphs? Carod and industry experts proffer that there are essentially 4 wealth generators that, if adhered to and mastered, are the key to winning in the real estate game and essentially BUILD your EMPIRE:

  1. Cash Flow. You have to think bigger and more detailed than rent collected is cash flow. Constantly be mindful and duty bound to account for the fluctuation in non-monthly but regular costs/expenses like: vacancy, repairs, and capital expenditures (replacements items like roof, appliances, plumbing, etc.). Keep these things in mind, along with regular monthly expenses as a vital way to maintain consistent cash flow and build.
  2. Appreciation. “Appreciation” is when the value of your property increases. Historically, in America, property value increases annually on average 3%. While this is not guaranteed therefore not reliable, there is another form of appreciation that can assure your property’s value will increase, and therefore should definitely be a part of your investment strategy. “Forced Appreciation” is the concept of increasing the value by physically improving the property. In other words, the increase of your property’s value—and in turn bettering your investment…BUILDING—is wholly in your hands. Listen to the experts, make smart financial decisions and the BUILDING will take care of itself.
  3. Low Pay-Down. As you collect rent, you take care of your mortgage and maybe even retain some funds. Over time, the property will be paid for from the tenant paying your mortgage, building wealth automatically. To make this concept clearer, pretend for a moment you owned a property that you bought for $1,000,000 with a mortgage for $800,000, and it made $0 in cash flow (it “broke even”) and never climbed in value. However, after that thirty-year mortgage is paid off, you’ll now have a property worth $1,000,000 that you didn’t actually save for. Your tenant paid it off due to the “loan pay-down.”
  4. Tax Benefits. The final wealth generator, with regard to real estate, are the tax benefits associated with owning property. The U.S. government favors real estate investors and uses the tax system to encourage the purchase and leasing of properties. From extra tax write-offs to the lack of “self-employment tax” to the 1031-exchange and more, real estate investors can pay significantly less tax than other business owners, using the extra cash to buy more properties or pay of the loan faster—helping to build greater wealth.

Once you’ve decided the one property was just the start, then moved on to truly building your business and increasing the number of properties in your portfolio, the sky is the limit. Because then, you can work with the experts, and learn to perfect your methodology and repeat your individual recipe for success. The only thing that is preventing it, is you. Your Empire is waiting and, so are we. Call Carod Properties, today, to get started! 1-877-62-CAROD

By: Alicia M. Caldwell, AMC Literary Services

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10130 Mallard Creek Dr. Suite 300
Charlotte, NC 28262
Phone: 1-877-62-CAROD
EFax: (704) 973-9513

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