Real Estate Income

Today I want to tell you about my favorite  way of earning money. Most of you know and love it too: it is real estate!

Why this is my favorite? Because no matter where the market moves, real state cannot lose its value up to zero dollar.  Yes, in 2008 we all experienced difficult time and losses in both, stock and real estate markets, nevertheless in spite of loss of value, real estate still could be rented and provide a cash flow.

Here I must confess: in addition to my “Retirement Income” business, I continue to hold my Real Estate Broker license in Florida for 15 years. It means I still helping people with their needs with real estate investing. Today, many people believe that the fastest way to make money in real estate is flipping houses. I personally never did. To make a profit, you have to offer a seller the lowest price possible. For me it means to take advantage of or even rip off the seller. Only then you can flip a house fast and earn your portion of money.  I believe in ethical business dealing, no matter what industry you are in.

Often, real estate cash flow becomes a stable source of income for retirees. Very important part is a correct structure of real estate ownership. The most effective way is buying real estate with your IRA, 401k, Roth IRA or even HSA (!) and other retirement plans. I will tell about “self-directing” your retirement plans in my future posts.

I’m not sure if everybody knows about The Opportunity Zones. The incentive is a new community investment tool established by Congress in the Tax Cuts and Jobs Act of 2017 to encourage long-term investments in low-income urban and rural communities nationwide. As an investor you will enjoy substantial tax incentives.

You can buy a business,  you can open a business, you can even buy a real estate. Since I live in Jacksonville, FL let’s talk about the opportunity zones in Jacksonville.  You can buy very cheap home and fix it. It will take up to $50,000. You make it nice, cosy and sparkling and place furniture there. Then you can rent it for short term, by nights. In this case you will never deal with evictions.  There are several short term rental websites, which do marketing for you. Such a house could be rented for $700 monthly, but because you will rent it by nights, your rent for one night would be $65-70. You do the math, don’t forget to include Homeowner insurance about $530/year and property taxes about $450/year.  Check www.airbnb.com and you will see prices in area of your potential investment. I paid attention, that there are plenty of expensive short term rental in Jacksonville, and not too many affordable ones. Let’s be realistic, an average family would rather rent a house instead of a hotel because of price… They can cook and save on food too… I saw an investor from New York who successfully manages his short term rental house in Jacksonville in Opportunity zone.  If you are out of town investor, you can travel to your property for improvements, repairs, inspections and other owner’s obligations. Actually, you can combine vacation and work: don’t forget that ocean beach is 30 minutes from such a rental house. Should I mention that you can write off these expenses when you file your tax return?

Is short term rental good for everyone?  Probably not. It certainly requires time, attention and desire. Statistics shows, that people, who are actively involved in some activity in their retirement years, live longer. They still are an essential part of society, taking care of people in their community or somewhere else.  How we call it? Happy life!

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