LIVING OFF DIVIDENDS & PASSIVE INCOME

I got email from a real estate agent yesterday outlining the numbers for a 4-plex in Texas. He did a great job of putting the numbers in a spreadsheet and then creating an image, which he then embedded into the email itself. This saved a lot of time and I’m sure resulted in a lot more of his investors actually looking at it right then, as opposed to filing it away for a later viewing only to forget it.

The only problem was the numbers were off. Instead of calculating a 2.5 or 2.75% tax rate, he calculated 1.35% tax rate. There was also no vacancy factored it. When using property management, there is usually a leasing fee, which can range from 50%-100% of the frist months rent. This is above the 8-10% property management fee, which was also conveniently set to 0%. I don’t know if this was deliberate but when you’re running the numbers these sort of errors will throw you off.

After fixing these errors, the $997/mo cashflow became $52/mo and the Cash-on-cash dropped from 37% to 1.97%!!! This kind of mistake will KILL your investment strategy.
If you don’t know how to do this kind of simple calculation, your real estate career will be sort lived!!! [I strongly recommend What Every Real Estate Investor Needs to Know about Cash Flow... And 36 Other Key Financial Measures if you don't know how to do this]

Trust but verify!

• Tax Breaks For New Home Buyers According to The American Housing Rescue and Foreclosure Prevention Act of 2008, passed by Congress in July, first time home buyers who purchase homes between April 8th 2008 and July 1st 2009 are eligible for a tax credit. They can get $7,500 tax credit or up to 10% of the......
• Homes For Everyday Heroes? According to the FirstHomebuilders.com, based out of florida, they're selling homes to everyday heroes. You can buy one of their brand new homes with $500 down and as little as $795 per month.Considering that the cheapest homes are in $150,000 range, thats sounds like 102% financing with an Interest-only payment......
• New Orleans Pre-construction Lots I'm almost at the end of my ability to buy single family homes now so I've started looking at much bigger projects. As JFK said "They cannot achieve greatness who do not tke great risks", so thats what I've decided to do. Take great risks. Which is why I'm trying......

• Federal Income Tax Rates for 2008 and 2009 – What is different? As we near April 15th, all eyes turn towards taxes and completing their federal and local returns.  A look at tax rates and where they might likely be headed will help give you a head start on what to prepare for and any changes that you might be able to......
• California To Delay Tax Refunds Due To Budget Crunch. Although I don't live in California or ever get a refund anymore, I would not be too thrilled with this: California's budget meltdown is about to hit home for millions of taxpayers awaiting their refunds and people who depend on the social safety net to survive, a top state finance......
• Is A Real Estate Investment Trust (REIT) Right for You? If you are looking for a way to profit from real estate and property without investing exorbitant amounts of money in illiquid, difficult-to-manage rental properties, a Real Estate Investment Trust (REIT) might be what you need. There are many infamous real estate investors (think Trump) that have made a fortune......

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