Investment Properties Part II

Your Real Estate Today
Saturday, October 21st

Paul continues his discussion about Investment Properties.


Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

Yeah and advice provided on the following program is on an individual basis as they should not consider today's discussion has a recommendation for any investment. And she carefully evaluate before investor Steve. Yeah. Should she. Hello and welcome to the very shortened version. And how of the show you real estate today we're sorry that we don't have our full hour today. Again. These Carolina people wanna listen of their football. Instead of talking about illustrate how could day eve. That there's any kind of comparison well. OK so I'll take a toddler got. And share what you I'm Paul Jamison your host. I'm with Jamison realty with Keller Williams and Jamison property management. We're excited to talk to you were gonna continue. From last week show. Also which was should shortened. And we're gonna talk about investment properties at a good time to Dubai so if you wanna catch the first piece to go along with a second piece. Jump on WBT dot com go into the shows tab. And your real estate today you can listen to our podcasts. Download them to your phone. Or device and take a listen so that they will be can grooming. Running together as they said okay. So. We're gonna talk today about about investment pretty. And if you wanna talk to me about investment property. After the show during. The week or at any time you can call at 846 done 846. 3663. Or on the web at my Jamison homes dot com and that's Jamison with a nine. That's a big part of war. We do we have. Eight agents on our team we do a lot of buying and selling of homes all over the north and South Carolina region. But we also work with a lot of investors. And that's what the topic is today. And you know I'm sure. You're listening and watching the news like I am. And some of the things they talk about our well. This is just seller's market there's no house's hand it's. Oh my goodness everyone is on the street waiting to buy a house and they just can't find it. And you'd think. How in the world could an investor. At this stage. Even had an opportunity. To buy a house joint. Well if you look at the last week's show we talked about the average rents in the marketplace and they're pretty good in the 1415100. Whether it's a house or apartment Condo town home. And there are still tremendous returns to be made now. Let me throw out a disclaimer for those that are older. Or what do we call ourselves the silver generation. The days of Carleton sheets. Trademarks are. The days aware of this all of a sudden became popular where you could do. By a piece of property for pennies on the dollar. Rand hit four gig billion dollars and make a big helium percent return and life was wonderful you held hands and use some. And used did like that woman on the commercial if you've held much money. That is not the way it really it. He had these processes and procedures I still have the books yes I still have the books because about background but we only battle on the the best way. Is to think about this as a business. And as a business. If you're getting a return of anywhere between six. And 10%. In the investment round talking about ran at this point you're doing really well. There's also capital appreciation we're gonna talk about that a little bit too we have time but. Is it a good time divide my answer TU is absolutely yes now. First of all it depends where right. I mean what see old adage location location location when it comes to rental property that really matters. Okay. So. We look at the numbers which is obviously ran verses returns you know you take the asking price she take the purchase price and what she got into it and use. Take the rent and you too good multiply the rent times twelve and divided by that investment and come out with a gross yield. And you said. This is a good place to start and then you drill down from there as there it's worth moving forward. And the area. Obviously the area makes a big difference. You know is it us growing area is that a hot areas that are moving area. One of my absolute. Favorite. Areas is what I call the training area. You ask what is the train. Or. Let's look at the Blue Line and the Silver Line. Here in our market we got ourselves a train whether we wanted to or not right. The train area has been a tremendous boom for real stay. You follow the train. You follow the money. And it is amazing if I look at what has happened. Around. The south side of Charlotte. Where the train is down south boulevard area and all the areas where the stops are. In star mount and a month for. Not only have the amenities helped. But the train. Is a significant impact on that area getting people from one place to another. Amenities off. Huge. Opportunity. For. Not just the train but also for increases in house. If you see areas that are not investing. And infrastructure and amenities. You see areas that aren't appreciating. All right so I'm gonna go rattle him a little bit and I'm gonna give you are great example. Of the difference. How about folks in here CI highlight all the difference between Belmont. And gas Downey. You look at the values of homes in Belmont. And the values of homes in gas Downey. Yes Belmont as much smaller more condensed. More refined. Belmont. There leadership did a fabulous job of not just creating workable amenities. But investing in the right places. Belmont is a hop in place to me. Gas down here. Is not. In that direction yet because Ian Wright investments in the right places and Estonia have not been made now I hope that there. There. Structure infrastructure and amenities change. But that's a great example areas that are growing and investing in themselves. Tend to do better look at Matthews. Holy smokes they barbecue and beer capital of the world. Is now manatees he can't go ten steps without find and barbecues and craft beer. Okay. It is amazing what they have been able to do they've created segments of the tent and they got chocolate factory I mean. Hey there and himself is gonna bring up property values both just be straight about. But. Growth in infrastructure so if you're looking to invest. Think about those kinds of things. What our future trends again that's why I like talking about the training think about the silver mine 23 years should now that's gonna do. Erica. Neighborhoods. What scorn on in the neighborhoods. Do they allow your rant are there many rentals in there. What are the amenities in the neighborhood what do they like what is the mix of renal vs ownership the more ownership. You see MLS Reynolds. I mean dot. The better you're going to see those neighborhoods do as it comes to rental trends. So. You know you can almost tell by driving a neighborhood. What that mix it is. I like. The older. Neighborhoods that are full of a lot of the brick ranch is split levels and older two stories break. Nice mature trees neighborhoods you're gonna see look at the lawns look at how they're taking care of look at the you know how the the pride of ownership is there. And look for opportunity. Also. Who is next door. What does that mean to your investment. It means a lot. So we're gonna continue this series about investors. And we're gonna talk about is that a good time to buy we already said yes so we're gonna talk about some of those criteria. We've got a little bit of time and we're gonna keep talk. So if you wanna talk to us is 8463663. Obviously we're not like today said he asked caller office. Or just stay where this or 1110. 99 point three W BT. And we'll be right back. Welcome back to the show your realistic to them hall Jamieson your coat it's a real cute Keller Williams Jamison property management. We're talking about investment property yes we are we've talked about. Is it a good time to invest and if you're just popping on we decided yes it is it depends where. Looking at the numbers the area is it's still growing. What's happening. With other rentals the amenities. Future trends uptown further south where do you think. Neighborhood mex rank vs not ran. Who is next door you know that's that's an interesting thing I'm gonna continue from the last segment. Is who is next door because I can tell you right now dollars to donuts. I looked at a house the other day and next door. To this newly renovated house this was actually rocky where our good friend of mine it's. Next door to this house. To house next door wasn't. Very difficult house to look. Okay. So what would require six foot privacy fence. To protect that investment no renter. Would have felt safe even though that house was absolutely gorgeous. So when you're buying investment property it does matter who's next door here really does. Okay. So let me ask and asks you know looking at rental property have you ever thought about keeping your current house. If you wanna move up or down and making it an investment property. The reason you bought it in the first place. May be the reason somebody may wanna rented in the second place. And it may turn out to be one of your absolute. Best investment I can't tell you how many people my age. Have taken their houses that day alone and kept them even though they've downsized or moved. And they have kept them without us and we managed them. I know the house I mean I've lived in it for good billion years I know that the systems the and idiosyncrasies how it is. And it turned out to be a great investment. To rent. And you know if you lived in a house ten or fifteen years you're well on its way to pay and for. He probably refinance that down to a mortgage rate under four right now. And it's worth taking a look at saying okay yes I can and avoid capital gains by selling it up to 500000 if I'm married or. Cannot convert this into an investment and what does that look like now. I'm not a CPA please consult your CPA for more information. But I did have a good night sleep last night and I can tell you it's worth spending a few minutes talking about. We play our. So. What if you're flipper you go way you know hey I wanna buy this house and I'm gonna put 101000 and I'm wanna make 25% return I'm just tell you. They're very very difficult to do right now I'm not gonna spend a lot of time mom because it's just. How segment of the market right now that is very very tight. And very very difficult. Does it happen yes of course but I see it happening most often in the homes that are over 300000 dollars. Okay. Gains okay. Looking at areas and gains. That's a very important trend capital appreciation does that play into the investment let's say your not getting the optimal returns that you want on rent. Okay. There's another part of the investment equation. That you need to take into effect let's say. Before I was talking about the optimal returns being. Six to 10%. OK but what if every year. Year over year. That's home games 5%. In back. What do you think that does. To the look of your investment. Over five years or 200000 dollar home is what game and sixty during and after compound and and I. That is a tremendous way. To say you know what I might be make him a little bit less on a month to month basis. But this asset that I bought at 200 is now worth 260. Flutie who. Best pretty good. You know you gotta be real way that. But. You know don't. Don't floated know that you have costs of selling it commissions taxes. So on and so forth but still. Even a 15% return after five years net. On top of the rain that you've received. Is not a bad way. To invest money. Now. And up. I think about the stock market right now I am not a stock guy I don't have professed to be a start guide not a CF PC FA CMA CRA whatever the heck you are. But. Doesn't stock market kind of scary little bit right now as high as it is. It kind of gives me flashbacks of the real estate market bag 2007. The fog a mirror real estate market when you could fog a mirror get real estate he didn't have to prove how much you made. This. Stock market concerns me. And I am very. Very. Tentative. About it. So. That's just my personal opinion and I'm keeping it there OK now let's go back to investing in property things I know about our. What happens. If you're upside down on you went. Verses. Your mortgage payment. Let's say your mortgage payment is thousand dollars a month and your rent is 900 dollars a month and every month your lose and a hundred bucks. Does it make it a bad investment. Well remember I just said. Capital appreciation. And taxes. Again I'm not CPA police in such a CPA for more information. But it didn't recognize sleepless. Make sure you understand. The tax ramifications. Of investment property and what does that really mean net net to you that someone is paying down your mortgage second of all. Should you refinance. That piece of property to improve those returns can't you refinance to improve those returns. Look at all those things. And I. Does that Tenet wanna budget. This lieutenant wanna stay. I have many many properties. Let me tell you what happens. Are in this in this happens all I got a phone call from a self. Couldn't Celek and selling goods seller could sell I guess I go les. Okay. Not a problem. Do you know how many tenants. I have so cold houses to. All your god. So let me tell you my theory on and I'll try to keep it sure 'cause I only have five minutes and twenty seconds okay. Let's say for example. You can't sell your house and you call me Paula wanna put it up for release in May do will put it back out on the market action okay. So or use say I want a list a for sale and I also when it was released that's a great thing that Jamison we can do that by the way. You know how many more people that brings through your house how much more opportunity. Yet to think about it. Okay we'll talk about that too but OK so Tenet drives up. Hey pretty interesting I like it I like the house I'd like to round oh and by the way how much do they wanna sell it for. While. We'll talk about that. Because I'm not gonna negotiate when you mr. tenant about what they want a buyer for 'cause I know you're gonna lease that right now. Do you know what I'm gonna negotiate with you mr. Tenet. When you've got all your stuff impact. And all your boxes unpacked. And you've been into the neighborhood picnic and your kids are enrolled in school and you are settled in their because you don't want to move again. I'm not gonna negotiate while you're in your car I'm to negotiate when you're already. Unpacked in that house Liv and and love in the during. So. I always say to prospective tenants are let's get your lease sign let's get to moved in let's get to happy. 34 months may and the owner will come to you and we'll talk to. And that's when you get the most money from somebody who's leasing because they don't wanna move. And they see the value of live in there and they've decided they wanted to prove themselves. It happens so often all right. Let's say you bought a piece of property from me and it has appreciated. And you're happy happy happy and you wanna sell you wanna get another one flu. Apart and right. But you call up your CPA in use today. OK I bought this house with Paul Jamison was a 150000 notes were 225000. What might tax ramifications. For Sally that's property. And your CPA proceeds to tell you that over the last few years he has depreciated your property and that piece of property paid 115 now. Has a basis or eight cost of value for tax purposes. About hundred grew ten. So now you got to pay taxes between a 110. And watch you sell that house for minus commissions and expenses. And you look at that number you go rock row Astro that's not a good number. So old. How do you fix because you won or reinvest the property. You do what's called a tax free or 1031. Exchange I do so many of these. What that means is you're going to buy a like kind. Property and you're going to keep those gains and moved them to the next property you my friend will never touch that money. It goes to an intermediary and the intermediary sends the money to the closing attorney would you buy the next one. You have 45 days from the date you sell to identify what property won a body and you have six months to close on it. That my friend as a way to capture gains. Hedge your bets against whatever market you may think maybe in the future and avoid giving. Uncle Sam ma. The taxes. That day so graciously want to collect. 1031 exchanges. Are awesome I probably do 25 or thirty of those a year. They are I've fabulous way. To move your investment. Forward. How are again. It's not the emotion in this stuff it's a numbers strike the numbers the area and the future. Okay. So. What other options do you have if you live in North Carolina. Oh. You can also buy in South Carolina but. You gotta know a couple of things. Says if Carolina. Likes to support people that live in South Carolina. So. If you live in North Carolina but you wanna invest in South Carolina. You gonna pay a little bit more. Also think about new construction. Guess what how much right at you gonna have an outhouse at its new construction in the next five years how about Millen. Good ways to look at cost black eagle on and on and on but I'm running out of time here. Connolly okay we'll have to do more this sort of talk about ranches to next time rangers' practice. Call Jamison and 846 done. 8463663. Or on the web at my Jamison homes dot com. We love to talk to you about investing buying and selling property management we're here to help. We thank you god bless what talk to you next time the show you real estate today. 111099. Point three you've.