Continuing with the real estate investing strategies based on your financial goal, we are going to cover the “Income Now” strategy.
Investment Goal: Income Now
With average household expenditures on the rise— they’ve increased by 4.6% in recent years, according to the Bureau of Labor Statistics— many families are seeing a significant discrepancy between the money they spend and the money they earn. Combine this with a job market still in recovery mode and what do you get? The fact that you simply need income… now.
The drudgery of constantly having to worry over monthly expenses can really dampen your lifestyle. After all, you’d rather be funding your retirement, sending the kids to college, or planning wonderful vacations with the family, without any worries.
You’re looking to diversify your portfolio and invest in an asset class that generates a steady stream of income – one that helps you and your family have the bright future you all deserve.
Solution – Real Estate Investing
Investing in residential real estate is a proven way to generate income now. A combination of market factors including low interest rates, high-yielding housing markets, and steady renter pools are all adding up to solid returns across the United States for residential real estate investors. Here’s just a few:
As you can see, by investing in residential real estate, you can generate the cash flow you need from collecting monthly rent. With a rise in rentership and decline in homeownership, the market is primed for you to invest in real estate and gain all the benefits.
Benefits of Residential Rentals
Introducing the Income Now Strategy
Our Income Now strategy enables you and your family to live a more comfortable lifestyle. Not only does this approach provide solid cash-on-cash returns (in the form of monthly rent payments), it also gives you peace of mind to stop worrying about the never-ending expenses of life.
Income Now Strategy in Detail
Our Income Now strategy addresses what properties you should invest in and the type of funding you should use, while also providing a thorough assessment of your risk tolerance. With it, an excellent synergy is created, leading to an increase in your monthly cash flow. Here are the specifics:
In order to generate income right away, you should focus on high-yielding properties that tend to produce immediate returns. This includes choosing investment properties in B to C neighborhoods where lower home prices enable you to potentially make more in rent than higher-appreciating neighborhoods.
Additionally, renovation costs should be minimal, as you want to get the tenant into your rental right away to start your cash flow. To properly vet the renovation cost, have a thorough inspection completed before you purchase, like we do at HomeUnion for our investors.
Deciding on your funding is always a hard decision. For the Income Now strategy, you can use financing or all-cash. The benefit with using all cash is that you have higher returns at the start, since you don’t have a mortgage to pay off that takes away from your returns; but more often than not, most use financing because it enables them to invest with less cash (only the sum of the down payment, which is typically 20 to 25% of the purchase price).
By investing in properties in B and C neighborhoods, you will be taking a higher risk than if you had invested in A neighborhoods. But while some people may become nervous at the prospect of investing in slightly higher-risk neighborhoods to ensure increased returns, you can still obtain greater stability.
How you do this is by building a diversified portfolio that includes properties in multiple growing markets. Market diversification helps minimize your risk, as your revenue isn’t heavily tied to one local economy’s performance.
Income Now Sample Portfolio
Now that we’ve gone over the Income Now strategy, here’s a sample of an all-cash portfolio to see the strategy in action:
This sample portfolio is comprised of five properties in B and C neighborhoods across the United States. By owning a rental property in Indianapolis, Birmingham, Jacksonville, Cleveland, and Memphis, you’re able to mitigate your risk.
For an equity investment of only $516,360, you can acquire all five cash flow properties and gain a net operating income of $30,641 for the first year that grows to $40,430 by year fifteen. Since you have no loan to pay off, you reap the benefits of collecting all the income to further achieve your financial goal.
Create Your Own Income Now Portfolio
No great structure is built without a blueprint. When you work with HomeUnion, we build you a custom portfolio that will best help you achieve your investment goal of Income Now. Call us now at 888-276-0232 or schedule a consultation to start the process.