Buy Homes with 15%+ Equity Position

When buying an investment property you want to purchase it with at least a 15% or greater equity position.  This is important for a number of reasons.

First, you make your money in real estate when you buy your investment, not when you sell.  Having 15% equity or more to start ensures that you will have a profitable real estate investment.  Too many people didn’t understand this important aspect of investing and they were counting on the market to appreciate in order to make money.  As a result of this gamble many investor have lost all of their money and have left the real estate game.

Second, having a 15% equity position in your property hedges you against the eventual downturn in the market.  Every market cycles and starting with a large equity position means that even if the market drops you can still sell your investment and make money.  In the strait path system we only anticipate holding property from 2-5 years but even in that short of a timeframe the market can change.  But with a large equity position we can usually sell for a profit or hold onto the property long enough to see the market rise again.

Third, with a 15%+ equity position in an investment property, along with the down payment, guarantees that the property will cash-flow from day 1.  Having a positive cash flow on any investment property is crucial to being profitable and being able to continue buying additional investment properties.  Far too often investors count on tax breaks to “cash-flow” but in reality have a negative cash position in the property.  Even some of the more savvy buyers barely show positive cash flow on an investment in the beginning.  Unfortunately, this low cash flow position counts negatively in their debt to income ratio and actually reduces their ability to invest in future property.  And a solid positive cash flow means that an investor can handle the eventual repair costs associated with investment properties.

Finally, there is something to be said for having a property with equity in it that allows you to sleep at night and not worry about your decision to be a real estate investor.  Equity means options leaving you in control of your real estate investing.  For more information about how to find these incredible deals in any market see my post “Turbo Charge Your Retirement with Investment Grade Real Estate” or visit me on the corporate site at Revolution.Strongbrook.com

Buy Homes with 15%+ Equity Position