DUPLEX & HOME INVESTMENTS
NEW BRAUNFELS, TX
 

 

Get Positive Cash Flows on your Duplex & Home Investments!

FIVE SOURCES OF

REAL ESTATE WEALTH

 

 

1. CASH FLOW BEFORE TAXES

2. TAX BENEFITS

3. APPRECIATION

4. PRINCIPAL REDUCTION

5. EQUITY RETURN


 

 

1. CASH FLOW BEFORE TAXES:

 

Rental income plus tax refund from depreciation less expenses = Cash Flow before Taxes.

With our current New Braunfels / San Antonio duplexes and homes, the high ratio of rent To sales price provides a positive cash flow in most cases.

 

2. TAX BENEFITS:

 

You will deduct depreciation on your tax return each year giving you cash free Reduction in your taxes.  Depreciation is computed as approximately 3.25% of purchase price over 27.5 years.  (Your tax preparer may use other methods to give you a greater deduction.) You can also deduct 100% of interest, taxes, HOA dues, maintenance and fees. Consult your tax preparer.

 

3. APPRECIATION - INCREASE IN VALUE OVER TIME

 

In the New Braunfels and San Antonio Metro area, we have had an increase in value of approximately 4.4% per year in the median price of duplexes and homes. Starting at $63,000 (January 1990) to $178,800 (June 2013) - a period of 23 1/2 years.  This shows a stable long term increase in value and a substantial increase in equity over 5, 10 and 15 years.  (see Texas A&M real estate website: www.recenter.tamu.edu/data/hs/hs460.asp )

 

4. PRINCIPAL REDUCTION:

 

Each month your tenants make rent payments to cover the mortgage payment that reduces the amount of the principal loan.  Over time the principal reduction becomes a significant amount of equity in your property.

 

5. EQUITY RETURN:

 

On the sale or tax free reinvestment of your property, your gross equity will be returned in three ways:

A - Appreciation - increase in value over time (See #3 above)

B - Return of your original down payment

C - Principal reduction (See #4 above)

 

 - - - - - THE TAKE AWAY - - - - -

Your renters are paying off your mortgage, paying your taxes, insurance and expenses & giving you an up-front positive cash flow.

 

HOW TO RECOGNIZE AND SELECT A GOOD REAL ESTATE MARKET

 

YES, IT'S LOCATION, LOCATION, LOCATION PLUS

THE TYPE OF MARKET NEEDED TO MAXIMIZE YOUR INVESTMENT IN RESIDENTIAL REAL ESTATE

 

 

A GOOD REAL ESTATE MARKET HAS:

 

1. CASH FLOW BEFORE TAXES:

Rent income high enough to produce a positive cash flow.

 

2. THE BUILD UP OF EQUITY OVER TIME;

Similar to a savings account with deposits made year after year.

 

3. LOCATION--- THE RIGHT NEIGHBORHOOD

 

GUIDELINES TO THE SELECTION  OF THE BEST MARKET:

 

1. THE FIRST GUIDELINE--- FOR CASH FLOW:

Formula: If the monthly rent income is in the area of 1% of the purchase price of the property, in most cases, this will cover principal, interest, taxes, insurance and other expenses resulting in a positive cash flow month after month for the investor. 

Example: $1,000 of monthly rent is 1% of purchase price of $100,000

 

2. THE SECOND GUIDELINE--- FOR EQUITY BUILDUP OVER TIME:

Equity is accumulated by Appreciation Gains and Principal Reduction added to the down payment

Formula: The market must have long term appreciation stability.

Example:  If the annual appreciation rate for a market has been 4% to 8% for 15 to 20 years then it is likely that that rate will continue for the future producing a significant amount of equity in the property.  What is to be avoided is a BUBBLE UP of 20% to 30% of annual appreciation and then a BUBBLE DOWN of 20%--30% of annual depreciation.

 

3. THE THIRD GUIDELINE--- LOCATING THE RIGHT NEIGHBORHOOD:

Look at the schools, services and shopping available

Not all neighborhoods in a good market will maximize your investment. 

 

 

Do your homework to locate your market.

Selected locations in the San Antonio New Braunfels Metro area

are excellent for new duplex and single family home investments.

 

 

 

REFERENCE MATERIALS;

 

Articles from the Texas A & M Real Estate Center that give data on why the Texas Economy will support residential real estate investment through 2050:

 

            (1) "Wanted: Housing for 30 Million More Texans" (187kb)

            (2) "Nine Reasons to Invest in Texas" Oct 2011 (687kb)

            (3) "The Amazing Rate" July 2013 (588kb)

            (4) "Land, Lots of Land" July 2013 (893kb)

            (5) "Crude Awakening: Oil, Gas Jobs in Play" October 2012 (1.12mb)

            (6) "Bubble Radar"  July 2011 (671kb)

 

 

Complete Duplex & Home Investor Services

1. Brand New Duplexes and New Homes with a 10 Year Warranty.

   A. Positive Cash Flow with a 20% or 25% Down Payment

   B. Rent Ready Luxury Duplexes & Home Properties

2. Low Rate Financing and Incentives from our Preferred Mortgage Companies

3. Excellent In-House Property Management

   A. Our selection methods provide quality tenants

   B. Shortage of Rental Properties in this area creates high demand for our new duplexes and homes.

   C. Statements are mailed to owners between the 5th and 10th of each month

   D. Monies are sent electronically to your bank.

   E. Professional property management suggested but not required.

 

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