Property Investment Guidance

Almost everybody is an investor or at least a potential investor. We choose to put our hard earned money in various investment that will give us returns and these investment schemes could include stocks, bonds, agriculture, education and even property.

When an individual pumps in money for the purchase of property with the intent of gaining returns on the investment then the property in question is referred to as investment property.

Although it may seem obvious to many that cash flow from property is almost promised, there are certain circumstances that could lead to minimum or no cash flow at all.

Take a look at some of the ways in which positive cash flow can be derived from property:

1. Income from Rental/Letting

Just like any investment, income from property will only be forthcoming if it is managed properly. In addition to the physical and the financial well being of the property, good management also includes a whole lot of other factors as well.

For example a study of the most expensive suburbs in Sydney indicates that there are certain attributes that attract high rent payers. Mathew Tiller, an NSW research analyst with PRD nationwide says that rental income is almost always determined by location.

Waterfront properties and those properties in close proximity to the CBD, shops, schools and places of employment are high-value properties. Properties that have nothing unusual about them will rarely attract reasonable rent.

2. Viable Options with No Closing Costs

When you sell a property, the buyer almost always asks that you pay all or part of the closing costs. This can be pretty pricey, and if you refuse to do so, you may have trouble finding a buyer. Instead of selling the house through traditional means, you can opt to keep the mortgage from the bank and finance the house to a prospective buyer.

Known as a wrap around mortgage, this philosophy means you can start making a profit quickly because it takes no longer to complete typically than renting the property out. By charging more interest to the buyer than you actually pay to your lending institution, you make a profit each and every month.

3. Manage Paying Unnecessary Taxes

Taxation will also determine whether one will be able to receive better cash flow. It is therefore critical to structure your investment property in a manner that allows you to avoid as much tax as possible. In Australia, the authorities will look at the following assumptions to determine the tax payable:

Whether the property is personally and directly owned jointly by husband and wife;
Whether both owners are foreigners and non-residents and whether they have a local income;
Whether there is no mortgage or other encumbrance on the property.

However, as you go about your business of managing your taxes, it will be advisable to seek guidance from professionals.

4. Add Value to your Investment Property

Value addition is the one concept that separates good investments from bad investments. This is a general idea which cuts across all business disciplines. For property, refurbishment its structures and surroundings will definitely change perceptions in the in the otherwise congested property market.

Examples in point are Darling Point and Dawes Point in Sydney. While the values of these properties are already sky high, they continue to increase due to value addition. Buyers and tenants always prefer to have that which they think goes beyond the money paid. That is the touch of class which may be all that is needed for property to attain a high cash flow.

If you choose to personally finance your home to an individual, you can make even more profit from improving your property. Often the buyer will want to make improvements to the home because they are living there and plan to own it somewhere down the line. This means you can get improvements made to the property at little or no cost.

If the buyer improves the property enough, you can even have the home re-appraised and potentially get a secondary mortgage on the it to provide a quick lump sum. Also because you are sure to get extra cash flow just from the amount the wrapee is paying every month, you will more quickly be able to pay down the principle.

This means when they are ready to purchase the property out right, or when they leave and you sell it to another party, you will have more equity in the home and therefore receive a larger profit.

5. Use Loans Effectively

If you are in the business to develop and sell or buy and sell, lending institutions may be of great help. Therefore, an increase of property equity will be of much significance. When extending loans, commercial banks always want to know whether it will be possible for the borrowers to pay the loans advanced.

Investing in trust deeds is one of the best ways to earn a very high return on your investment, while at the same time making sure your investment is safe, secured by the value of the property, all while receiving a monthly check based upon the amount of your investment.

Smart investors pad their retirement accounts with Trust deed investments because they normally earn 10%-15% annually on their investment!

So, what is trust deed investing? Good question.

Trust Deed investing is the loaning of money with real estate as collateral. In California, most loans against Real Estate are called “Trust Deeds,” after the name of the legal instrument used to pledge their security. With expert guidance from Nnew Haven Financial, anyone can successfully invest in trust deeds. This contrasts with most other investments where extensive study and years of experience may be necessary before you can invest with confidence. Trust Deeds are safer than most other investments of comparable yield because the risks are identifiable, as well as the procedures necessary to counter them. Many investors, especially retired people, also enjoy the relatively minor effort needed to manage the investment once their money is in place.

The typical trust deed investor is a person looking for a competitive return on their investment. The interest rate the borrower pays is generally higher than the borrower would pay at a bank. The investor in turn, receives a higher return on his investment. Additionally, the money you loan is secured by the borrowers’ equity in their real estate. The security, the good return, plus the monthly cash flow, make trust deeds and excellent investment vehicle.

At New Haven Financial, we receive many calls everyday from borrowers, realtors and mortgage professionals who are looking for private money for a real estate transaction. It is our job to fund loans with our investors investments, then after the loan is funded, we collect the payment each month, and send our investors a check every month.

What is so special about our trust deed investments is that we normally only provide loans in the Los Angeles area. That way, before we ever lend our investors money, we physically see the property, interview the borrowers, and have a professional appraisal completed by a licensed real estate appraiser.

Our job is two-fold, to make sure we give our borrowers a good loan at a rate that they can reliably re-pay, and also make sure our investors receive a high return on their investment is the safest way possible.

What makes trust deed investing with New Haven Financial safe?

The basic premise of safe trust investing is to make sure that the property(collateral) is sufficient in case the borrower does not make their payment, and we have to repossess the property. Although this is rare, it does happen. However, we do have a healthy safety net, in that we only lend on low loan to value properties. Loan to value is simply the loan amount divided into the value of the property. Here is an example: a client calls and needs a loan for $100,000 on a property values at $300,000. In this scenario, the loan to value is 30%. This means that if the borrower were to default on their payment, there would be approximately $200,000 left over. Is this safe? You bet it’s safe. That is what makes trust deed investing so attractive to both experienced investors and new investors as well.