A Real Estate Investment Strategy For the Times

No time to get into serious detail, but there are folks comin’ out of the woodwork who are ripe for this strategy. Though the parameters I’ll lay out shortly are perfect for San Diego investment property owners, they’ll obviously make the strategy produce regardless of your geography. All the parameters aren’t necessary for the strategy to bring forth solid results.

Here’s the perfect scenario from my viewpoint. NOTE: Whether I’d advise a straight sale, or a tax deferred exchange is wholly dependent upon your specific set of circumstances. Just so ya know.

You own free and clear investment property(s). They A) Are relatively long in the tooth B) Are not in the best locations C) Either functionally obsolescent now or close enough to make tenants go elsewhere D) High operating expenses along with relatively low annual depreciation E) Started in good neighborhood but now clearly declining

Move the equity to new or near new income property in a proven growth region. Put some, but not much debt onto the property(s) so as to increase the income (via number of properties newly acquired) and the tax shelter as much as possible. New property will easily sport lower operating expenses for the foreseeable future. Newer property will also generate more rent per square foot than their ancient cousins. Increased tax shelter will cover far more of the generated cash flow than the older properties ever did. Functional obsolescence will be banished for decades.

Bonus: The price/rent ratio will be far superior in most cases to the property you left behind.

Due to the combination of reduced operating expenses, higher rents, increased tax shelter, and more property acquired resulting from the usually improved price/rent ratio and the addition of low debt amounts — the bottom line after tax cash flow is significantly improved now and for many, many years. And cash flow is usually the end game for real estate investors who’ve gone outa their way to own free and clear properties in the first case. Duh

It’s a win-win for investors with this set of circumstance in place far more often than not. You don’t need all the factors to make it work for you. Don’t need to be completely free and clear, just close. Same for all the factors. Just apply common sense. If it’s a close call — ask yourself why it’s a close call. Step away and get some professional advice. You could be missing something. Also, don’t get too froggy with this — be absolutely sure the strategy fits.

OK, that’s it for tonight. Call me and we’ll see if you’re a fit. 619 889-7100. Or you can send me a quick email. Have a good one.

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3. What’s An Aggressive Real Estate Investment Strategy? According To Whom?
4. How Can San Diego Real Estate Investors Improve Their Current Strategy?
5. Retired Real Estate Investors — Lotta Income — Alas, Lotta Taxes Too