Strategy, Appreciation, and Financing

In this current economic environment, many people are looking for alternatives to the stock market. We believe that real estate is not only a good alternative, but is by far a superior investment – if you find the right real estate. The real estate market is obviously down now – in some cases it’s down 25% – so now is a terrific time to buy, perhaps one of the best in history. But you must still choose carefully.

There are a lot of foreclosure opportunities out there right now which can be purchased inexpensively, but they are not all good investments. Many, if not most, of these properties can not be rented out for a profit, requiring the new owner to pay more money each month to cover the mortgage. Priority Investment Group believes that not only is this a foolish way to buy real estate, but also totally unnecessary in today’s market.

Furthermore, many of these properties, even at the reduced price, may still not be below market value – if they were overpriced to begin with, and the market itself has fallen, then the foreclosure price may be the market price. There are additional hazards like huge taxes, hidden liens, or undisclosed maintenance problems, just waiting to bankrupt investors, by destroying the two priorities of good real estate investment: current income, and future appreciation. You wouldn’t buy a stock that didn’t pay a dividend and that you could not sell for a profit would you?

At Priority Investment Group, we provide turnkey investment properties that both cash flow, and are well below market value – sometimes as much as 50%!

The typical property that we sell for $45,000, appraises for between $80,000 and $85,000, providing our investors with up to $40,000 of instant equity. Our properties rent for between $750 and $850 per month, and after taxes, insurance, and future repair escrows, cash flow between $1500 and $6000 per year.

Every property is professionally managed by a management company with over 20 years of experience in the local area, a company that does everything from placing tenants, collecting rents, and handling service calls, to sending you your monthly rent check. There is no easier or safer way to invest in real estate!

Today’s credit market changes quickly, but in general a qualified buyer can purchase these properties with about a 720 credit score and a regular income, as well as some verifiable assets. Current lending regulations will allow a typical buyer to purchase up to ten of these properties with conforming loans. These properties can also be purchased with cash, or, in one of the most superior investment models available, by using tax-free retirement money as well.

In order to purchase our properties with retirement money, an investor needs a self directed IRA or self directed 401k. The property can be purchased with cash from that retirement account. All rent collected will be put back into that account, and any profit from the future sale of the rental property will be put back into the retirement account as well – all tax free until it is withdrawn.

Call us today for more information, or to get started.

A Note About Appreciation
Appreciation is, obviously, something that’s impossible to precisely predict. What we have done, however, is choose properties that are cash flowing, so that you make money whether your property appreciates or not. With that said, we do believe we have picked a market in which the properties will appreciate, and potentially appreciate dramatically. Just to consider: although the market for home sales in these neighborhoods is not strong right now, most of the properties are appraised, today, at between $80,000 and $100,000. Even if the properties don’t appreciate, but simply sell for their appraised value, you achieve formidable profits.

Also consider that the real estate market is currently in a slump. If the value of your property simply returns to what it was five years ago, you will net a great return. Determining your own opinion of what the appreciation could be is part of your due diligence. We’re excited about Detroit right now, but we encourage you to make your investment decisions with a conservative approach to this factor.

Financing
These properties, when purchased with cash, provide excellent positive cash flow, income as much as $6000 per house – a 15% cash-on-cash return. And that’s before appreciation and tax benefits.
Not a cash buyer? There are several ways to finance these properties, and we can help. Lending restrictions, as you probably know, have never been tougher, and even getting a regular refinance loan on an investment home is very hard. Basically, to do a regular loan on these properties, as an investor, you’ll need a 720+ FICO, income, and cash reserves equaling six months of expenses on each property you own. You may have up to ten Fannie Mae backed property loans if you meet the qualifications.

We can help you temporarily finance these homes with hard money, allowing you time to “season” your investment and pave the way to refinancing. Since the U.S. credit market changes every day, please call us to see what is the best method of financing now.