As an investor, you regularly evaluate your holdings for performance. Your investments should be diversified with a solid mix of stocks, mutual funds and bonds, shouldn’t they?stocks bonds mutual funds - real estate investing

That depends. Some say diversify your holdings but other investors including investing moguls like the Warren Buffets of the world don’t believe in diversification and instead believe that you should be “all in” on whatever investment you truly believe in.  Whichever philosophy you subscribe to, you should have real estate in your portfolio.

Real estate values plummeted over the years but are on the road to recovery and those involved in the real estate market are enjoying quite a ride. You can actively buy, rehab and flip a property for a profit but that involves both time and talent in order to navigate a successful flip. There is risk involved and while real estate is an asset you can see and feel, unless the property is acquired at the right amount with an eye on repair expenses and final sales price, you can find yourself on the losing end of the transaction.

Depending upon your own financial goals, assets and other critical factors, you, the individual investor have several choices. In the world of real estate investing you can invest your funds to finance a flip or you can invest your funds to finance that flip for other investors. Either way, EquityBuild offers solutions.

Flipping

Buying, rehabilitating and flipping is a proven way to garner greater returns in today’s market but as just mentioned, it takes time, talent and your money to finish the deal, all in your quest for the double digit returns found on investment real estate.  However, EquityBuild’s model allows you to access all the professional experience required for a successful flip without the day-to-day, hands-on attention such projects demand.

Say for instance that your goals are less interest and dividend income and more of capital acquisition. Let’s also say that you have $125,000 that you have available to allocate to a real estate investment project. EquityBuild identifies, evaluates and presents to you such an opportunity.

Let’s look at an actual transaction with your parameters in mind.

A distressed property was bought for $29,900 and sold for $161,000 and an investor agrees to participate. After rehabilitation and selling costs, the net income will be $25,260. The breakdown appears below:

Acquisition Cost             $29,900

Rehab Cost                    $91,840

Closing Costs                 $2,000

Total Investment              $123,740

Sales Price After Rehab   $161,000

Less Selling Costs           $12,000

Less Taxes/Insurance        $2,835

Net Income                      $25,260

The total investment is $123,740 for a return of $25,620. Equity Build offers different options based upon the investors desired rate of return and split with Equity Build. The individual investor can select:

Split        Income        ROI

60/40        $15,156    12.2%

35/65        $13,791    11.1%

In this scenario, the investor can decide to take the actual ROI with a 60/40 split or get a guaranteed 12 percent return and a 65/35 split.

The private investor takes his selection between the two splits and can retain the profits or do what most do and reinvest in a new project.  If the investor rolls over his profits into the next project and repeats this process three times during the course of one year. The original investment, if duplicated four times, provides a whopping 37 percent return in just one year!

Let’s look at another real life example. Here, the property is a four bedroom, two bath single family home that was purchased for $40,100.

Acquisition Cost            $40,100

Rehab Cost                   $67,760

Closing Costs                $2,000

Total Investment             $109,860

Sales Price After Rehab  $148,500

Less Selling Costs          $12,000

Less Taxes/Insurance      $5,647

Net Income                     $26,640

The total investment for this rehab was $109,860 for a net profit of $26,640. As with all EquityBuild projects, the investor has the option of a 60/40 split or a 35/65 split with EquityBuild. Again, if this same scenario were repeated three times over the course of a year, the ROI is nearly 44 percent!

Returns on investment for such projects will vary due to the nature of the property, rehabilitation costs and final listing price but returns of 16 and 17 percent or more are commonplace. The investor can choose to bring cash to the closing table, finance the purchase or a combination of both. All the while, EquityBuild manages the entire transaction from property identification, feasibility, rehabilitation and finally listing and selling the home.

Should the investor choose to leverage and finance the transaction, EquityBuild Finance is there to assist with issuing the required funds.

Note Income

Individual investors may also seek double digit returns by providing financing to individual investors who work with EquityBuild to flip real estate. This is accomplished by providing funds needed for upcoming flips to EquityBuild Finance, who procures the funds needed to finance a project, creating a mortgage pool. Investors have the opportunity to invest in any particular project that is presented to them at any level, with a minimum $20,000 investment required to participate.

The notes that are issued to finance properties are always mortgages in a first lien position, with solid, consistent returns at 12 percent, occasionally more but never less. Interest income accrues during the regular course of the loan term.

For example, an individual investor wants to participate with EquityBuild on a real estate investment and wants to borrow $100,000 for 90 days to finance the deal. The investor works with EquityBuild Finance to acquire the needed funds. One individual may decide to provide the entire amount needed or the $100,000 may be funded with multiple investors, say four individuals who provide $25,000 each.

If four decide to finance the project, each will wire $25,000 to the title company that will handle the closing and disburse the funds. As the project is completed, each investor receives the original principal plus the allotted interest based upon the terms of the original note.

Private individuals have the opportunity to invest in real estate by participating in the financing of real estate alone or with other investors or buy properties vetted and managed by EquityBuild and split the profits when sold.

Today, it’s quite possible that private real estate investing both in terms of financing flips to funding mortgage pools is at its absolute zenith. Property values have fallen yet are now showing signs of stabilization. The market is full of distressed properties that can provide double-digit returns to investors and traditional mortgage rates are at or near historic lows, widening the pool of home buyers across the board.

Real estate investing allows you to invest as little or as much as you want along while receiving solid, consistent returns not found in traditional investments. Either way you’re ahead.

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