(No Subject) - Email from David Halsey

Hi Jeff,

We were discussing how making use of you equity could grow your wealth.

Here are the basic principles.

Real Estate leverage is the use of borrowed money to increase your profits in an investment. Building wealth via real estate requires the use of leverage. Let's assume you have $100,000 to invest and you purchase stocks, or hire an financial consultant to help you invest $100,000. Stocks have been appreciating at an average of 7% per year. At the end of the first year of operation, your stocks are worth $107,000. At the end of year two, it is worth $114,490. Now let's assume that you put your $100,000 down on a $500,000 income property. At the end of the first year, it is worth $535,000. At the end of the second year, it is worth $572,450. By using leverage or borrowed money to purchase an income property, you have increased your profit by $57,960 in just two years. To get the full advantage of leverage, put the minimum down on a good property which has a strong likelihood of appreciating in value.

Most people over the last 5 years have taken their equity out to either improve their homes or pay off their credit card debt. The smart use of equity is to use it for other investments just like the one you own now in your primary residence.

My advice is to first find out what rents are going for in you neighborhood, and what the management costs will be for the property. There are management companies that will guarantee that you will always have a tenant in your home. With rents increasing it is going to get easier and easier to rent out homes. In fact call your local Property management company and ask them some questions.

Second, consult a Loan Consultant and find out how much money you can take out of you home, to keep the mortgage payment, taxes, insurance and management costs below the net rents.

Third, ask your Loan Consultant, with the amount of money that you are taking out of your home, and the amount you want to keep your mortgage payments. How much could I afford in a home?

If you have any questions feel free to call me anytime.

Thank You.

David Halsey

Team Leader

(951) 966-4534

(800) 728-7118