How To Double Your Income In Real Estate: Hold, Buy, And Sell

To double your income in real estate, you have to know when to hold, know when to buy, and know when to sell. "You can't count your money when you're sitting at the table. There'll be time enough for counting when the dealing's done." All kidding aside, in today's economy holding, buying and selling are three very separate issues.

Hold
With the recent calamity in real estate and financial institutions, you may just want out. Dumping your property now would not be the smartest move you could make. Your best bet is to keep the properties that you have. Do you best to hold, it won't be worth it if you dump it now.

However, if your property is producing a negative cash flow, you may want to weigh the amount of money it's costing you with the amount of money you'll lose in the sale. If you bought your property for $175,000, but it will only sell for $135,000 right now, expect to lose $40,000 on the deal. This sounds like a big loss.

Now let's look at how much the property is renting for. If you were renting your property at $1,800 before, it was producing a positive cash flow. If you're still able to rent it at that price, sit tight. It will be worth the wait.

If the rental price has dropped due to competition, and you are renting your property out for $1,250 to $1,500, your cash flow is negative. You're in the negative as much as $250-$500 a month.

How did I figure this out? I don't claim to be an expert in real estate, but if you use The Rule of One Percent, the rent of the house should be one percent of the property purchase price to produce a positive income. That means the aforementioned house should rent for $1,750 to produce positive cash flow.

Sell
The natural instinct of most property owners seeing negative cash flow is to sell. Take the same property mentioned above. If you are losing $500 a month on it, and you'll lose $40,000 in the sale, that's $6,000 in negative cash flow a year if you hold. If you sold with a loss of $40,000, it would be the same as holding onto a property with negative cash flow for about 6 years.

The final decision is up to you. If the housing market goes back up to where it was in less than 3 years, it might be worth the wait. Can you make some improvements or build another unit in the basement until then? This may increase the rental value.

Buy
Even though it's a buyer's market right now, the prices were so inflated that the drop has them in the price range they should have been in the first place. If you want to take advantage of good buys follow these three guidelines:
1. Only buy from motivated sellers
2. If you incur no out-of-pocket expenses, it's a good buy
3. Keep a good interest rate

To double your income in real estate, it's as simple as negative and positive cash flow. These are just rules of thumb. Of course, there's a chance that you'll pass up a good deal or lose a little money along the way. These chances do not outweigh the statistics of The Rule of One Percent most of the time.

About the Author:
www.giftfromraymond.com has been teaching his true wealth secrets for over a quarter-century so you can double your income doing what you love.

How To Double Your Income In Real Estate: Hold, Buy, And Sell

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