Our choice of Brantlim and how it connects to the uncertainty that prevails in the market
#יםמהשבוי Diana Pinhasov, #Post5
When we started studying the field of real estate, we thought of starting with flips and thus increasing our capital more quickly in the short term, but quite quickly we realized that in the meantime it is more suitable for us to deal with rentals, it is a calmer field, running long distances and the ambition is that this will be the construction of a system that will lead us To the desired freedom. It's important for us to enjoy the journey and not feel like we're constantly sprinting, and this is one of the ways to generate financial wealth over time.
As we mentioned in one of the previous posts, in the maintenance of real estate assets we enjoy both a current cash flow and an increase in value over the years.
In addition to the fact that dealing in real estate is more profitable for our routine and nature, there are several other reasons that make us continue to deal with rentals:
*There is an option to build a portfolio of assets using leverage using the BRRRR method -
Buy, Rehab, Rent, Refinance, Repeat
With this method, properties are bought below the market price, renovated to a level that increases their value, a tenant is brought in who generates a monthly income, and during the mortgage process of the property we have already purchased, the amount of the loan is consolidated according to the value of the property after the renovation and the amount of rent. With this loan you can continue to purchase more properties with less money that needs to be brought from home (which can also be obtained through other loans) and thus continue to buy as long as the rent covers the loans and also leaves some profit. In the end, through leverage, you can get nice returns on the money we invested.
*When you decide to build a portfolio of properties for rent, it helps us spread risks, because if one property has problems or a tenant who doesn't pay, the rest of the properties are put in.
*Turning a property into a yielder is usually the contingency plan for any flip or new construction if there are changes in the market or if they fail to sell at the requested price
And that brings us to the main advantage of rental properties:
*Minimizing risks when there are changes in the market:
Right now there is a kind of uncertainty in the market, very high inflation, interest rates that continue to rise more and more, the markets are slowly starting to cool down, it is already more difficult to get financing due to the high interest rates and fewer people can purchase houses, which can cause prices to fall.
When we hold properties for long-term rental, even if the value of the properties decreases at a certain point in time, over time the prices will rise again and even continue to rise, you can see this in every graph of real estate prices over the years.
When the market cools down and fewer people can purchase a house, they turn to the rental market, in such a situation there is more demand for rentals and rental prices rise.
So even though there is future uncertainty, we feel comfortable continuing to purchase profitable real estate assets for us and our investors, this is a long-term investment, even if there is a drop in property prices, we can wait for them to rise again and even continue to rise, and in the meantime we will continue to enjoy rising rents.
We would be very happy to hear how you operate in this period of uncertainty and how you minimize risks.?
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