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Buying good long-term growth real estate

Friday, July 03, 2015

The merits of good growth real estate.

I get asked a lot from clients, friends and family what I am pursuing in real estate investing. As most of you know, I’ve been at this business for 14 years now since age 23. My entire adult life has centered around real estate investing. I really don’t even know anything else and to be quite honest with you, I am OK with that because I love what I do. It helps that real estate can also be very financially rewarding. I’ve done it all, buy-and-hold the wrong way and the right way, rehabbed, retailed, wholesaled, wholetaled [yup that’s a technique], assigned contracts, completed syndication deals, some small commercial, lots of residential and I own a decent amount of multi-family.

Over the years, my viewpoint on real estate has really changed to selecting good growth real estate more than cash flow. Cash flow is nice, and you must have it to sustain, but I am really after long-term growth within my portfolio at this point in my career. Cash flow on a decent property may be $200 a month, $2,400 a year if debt is introduced. Well, I look at growth as being as important as cash flow and in some cases – more important.

If you have a cash flow home making you $2,400 a year, that is good. But is it appreciating in value at the same pace as a growth property? Maybe, maybe not. I think you need balance here. You want some good “cash flow earners” if you will, but, you also want some high-growth properties. Please, do yourself a big favor and RUN AS FAST AS YOU CAN from anything located in a warzone location. If most of the people living in a neighborhood are RENTERS, DO NOT buy in that area. Buy where owners live, period! Please, just don’t fall for the false allure of “low price, high rent” it rarely is sustainable. Ask me how I know………..

So, what have I been buying in 2014 to hold on to long-term?

Here is what I have added to my portfolio so far this year, remember this is ONLY my personal holdings, not our property inventory. These properties are what makes up my own portfolio that I will someday leave to my kids.

  • 115 Cherrington Drive – 2 bed 2 bath condo in terrific neighborhood.
  • 4515 N Progress Ave – 2 bed 2 bath condo, again, terrific neighborhood.
  • 409 Clinton Road – 3 bedroom 1 bath ranch home in gorgeous neighborhood. This not only has really strong growth potential but great cash flow due to low taxes and high potential rent.
  • 4561 N Progress Ave – 2 bed 2 bath condo w/ 1 car garage/ I level living and highly sought after unit. This is a beautiful home and I am actually moving my wife’s grandmother into it. win – win for all of us.
  • 1000 Scenery Drive – 3 bedroom 2 bath split level in god school district.

So this represents about $650,000 in newly acquired assets so far for 2014. My goal is to add another $350,000 or so to make it an even 1MM for 2014. These new additions bring my portfolio to 64 units with a current market value of around $5,400,000. I have good cash flow as well as good growth portfolio wide. Sure I own some losers, but hey, you live and learn right.

I encourage you to get out in the marketplace and acquire as many choice assets as you can. If you need help with that, call me, I will do what I can. 717-901-7763 Ext. 302. Now is the time to grow your holdings, the debt is available, prices are still depressed and rental demand is high for choice properties. Buy with safety in mind, cash second and growth third and you will do just fine. Just stay out of warzones or even marginal areas, you will thank me later. Talk soon and happy investing.