Is all your investment money tied up in a single property (maybe your residence) and you can’t figure out what to do with it, if anything at all? Here’s a real life lesson on how to take money that is not working for you and get it busy earning great investment returns.
This is an actual scenario from one of our seminar attendees by the name of Evelyn. Evelyn owned a property in southern California valued at $2.5 million which was limping along at about a .4 RV (rent-to-value) ratio. At Empowered Investor, we recommend nothing lower than .7, so Evelyn’s property wasn’t pulling its weight. This was a perfect example of a one property, non-diversified, all your eggs in one basket real estate portfolio.
Here’s what could be done if you find yourself in a similar situation. Sell or refinance this $2.5 million property and use a 1031 tax-deferred exchange to put 30% down on a bunch of properties around the country in strong markets. With this kind of money you could (assuming you qualified for all the loans) buy about 34 properties to take the place of the original one.
Instant diversified portfolio and now debt would be working for you like a juggernaut as the years roll by. The lesson here is don’t let equity sit unused in a property that is doing nothing for you but holding down dirt. Even if you happen to own property in the hideous southern California real estate market, there is a way to leverage yourself back onto the road to financial independence. Need more specific advice? Call any of our expert investment counselors at 714-820-4200. The advice is free.
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