But can we let you in on a private secret of ours?
We actually don’t care about the prices on our investment properties, at all.
True wealth isn’t income.
And although we focus on cash flowing properties, that’s only how we decide which properties to acquire and which to ignore.
Our larger goal is in building home equity.
Cash flow provides income. Building home equity creates wealth.
We’re very deliberate about this. Strategically, refinancing properties when we can to acquire more but never losing sight of the larger goal, to one day have our properties completely debt free.
In the real estate business, so much is made of capitalization rates, cash flows and prices that certain investing principles are ignored.
And those are to own, free and clear, a set of assets so that our money is working for us, and we’re not working for it.
Real estate just happens to be the vehicle we’ve chosen to achieve that goal.
In our opinion, building home equity translates into real wealth. Incomes tend to be spent, often frivolously.
Building home equity accumulates over time, it builds and compounds.
So although it’s important to qualify an investment on its cash flowing ability, that’s actually not our long term goal.
And it’s also why we’re so unaffected by property prices.
Of course we realize there are challenges when prices move, buy-out prices on rent-to-own properties to occasionally defend and creative solutions to be found.
But if we’ve bought our properties properly we’re putting ourselves in the best position to have alternative income options during inevitable swings in the real estate market.
The majority of real estate investors you’ll meet tend to focus only on income or only on appreciation… very few focus on building home equity.
Equity building takes time, effort, patience and perseverance.
Over the years we’ve heard many out right brag at the “insane” cash flows they’re obtaining or the “guaranteed” appreciation they’re banking.
When you get several of them in a room together it’s like a band of pirates counting their treasure before they’ve found the chest.
Our approach has always been about “time in the market” and never “timing the market”.
If our futures were dependent on timing the market we would have never bought our first rental property, we would have never bought our first student rental or our first rent-to-own.
Of course, buying your own home, with no tax deductions and no positive cash flow, is a completely different animal.
And it’s understandable that if you’ve got equity locked up in your home and you want to try and protect it you’re nervous about the state of the market.
But if you’re plan extends out more than a couple of years, you’re buying cash flowing property in good areas with good fundamentals and you’re keeping up to date with the latest interest rate movements, you should be able to sleep like a baby. We do.
However, if your time frames are short and you MUST earn money quickly to get yourself out of a rough patch, that’s a different story. We can’t help you with that and don’t pretend to have any answers for you.
We know some late night TV pirates that may be interested in speaking to you though.
Visit our other site www.therealestaterenegades.com for more real estate investing articles.