Message #1 From:
Jason Date: April 27, 2008 02:22:19 PM
Real Estate For Building Wealth
I have a good friend who served in Iraq who used real estate to build wealth. When he returned home from Iraq, he and his wife were able to pay off the second mortgage on their first home. They formulated a strategy for purchasing fixer upper homes, and pulling the new equity to purchase more fixer uppers. The one thing they did not, and could not have planned for was inflation and rising interest rates. They purchased roughly 30 properties, fixed them up and advertised them as rentals. Some properties went to low income, and others rented at a good premium. They did struggle at times to get renters to pay, but for the most part things went pretty well. Then came tax season, they were terribly miss informed as to what, how, and when they could write items off. They had anticipated having over $100,000 in write offs their first year, but their tax accountant informed them that many of the things they planned on writing off could not be, or had to be written off over time. This was the second road block in their strategy. The third came as home prices began to fall, and their loans were more than the homes were worth. They are still above watter, however both work full time jobs to pay interest and taxes, leaving little for fun. I think they will make it out, but they need to sell some of their properties to git rid of their inflating interest burden. From a net worth stand point, they are worth a ton. From a cash flow stand point, they got nothing. I'll post more as information is available.
