To all those who constantly roll their eyes and tell me to play some music instead of the endless stream of podcasts, interviews and audio books "like a normal person would." I can officially inform you that the time has been well spent. I came across a very interesting topic. One that I think will be most informative and interesting to you all. Even debatable.
I am most eager to hear your opinions on it, so please feel free to comment away!
Now, before I go any further, if you don't know who I am about to talk about, it is vital that
you please, I beg you, go and google him. He is one of the kings when it comes
to Real Estate Investing AND as you all know, if you aren't learning from the
best are you really learning at all?
Who am I talking about? Robert Kiyosaki of course.
It was during an interview, when the Interviewer asked him whether he was concerned about the upcoming (then) predicted real estate crash. He responded something fascinating. Not only was he not concerned about the crash, but it was the best time for him. I of course rolled my eyes and said “sure. For you it is. What about everybody else?”
Though, what came next threw me off course for a half second. He explained how he doesn’t base his real estate investment’s value off of the market value. Therefore, any fluctuations in the Real Estate Market doesn’t concern him. Where does he base the value? Off of the predicted value a renter would see in the space.
By this means, he retains the control over his property’s worth and not the market. (AMAZING, RIGHT!)
When a broker sells you a house, he usually goes on and on about the appreciation value…the ARV… and the question comes into play, well what happens if the appreciation goes down? Have you now lost money on this investment? For fix & flippers this tends to be true. However, if your flip home turns to a rental asset? Are you really basing the home’s value on the market or on what the renter would deem a worthy price for the space?
And that’s when it dawned on me.
People always will need a place to live and by default to rent. When the economy is in the best of times there is still the those who are not on at the economic level to be able to afford to buy, along with college students etc. In the worst of economic times, people will end up ‘downgrading’ to a rental unit. Now, the rental value of that unit is solely dependent upon whether the market will see the price for what they are getting as of fair value. If you can “upgrade” the units finishes or appliances you have now increased the value of your rental unit and tenants are willing to pay for that increased value.
To bring this back into a full circle, if you are the one who can increase the value of the rental unit, than it doesn’t matter whether the appreciation on your property will increase or decrease. That is merely an added bonus when you decide to sell. In the meantime, your mortgage plus some is covered by the rental income which you solely control. Now i realize I have oversimplified this topic but even in the most basic level it is
DON'T YOU AGREE?
"Specializing in the legwork that is required to get the curb appeal & market desired interiors on real estate development"