Learn To Be Rich

I recently spent some time answering a series of about a dozen frequently asked questions (FAQs) about the referral program we have.

UPDATE: We now offer two very different referral programs. One we call our sponsorship program and the other, older one, is discussed below.

You can read those by checking out the posts in the Real Estate Agent Referral Program Category. NOTE: Use the “Older Entries” link to read more of the FAQs when you get to the bottom of the page.

Or, select from the list below:

• Overview of Our Real Estate Agent Referral Program
• How do I, as an agent receiving the referral, get paid?
• How do you, the person referring the client, get paid?
• How do we send you the referrals?
• Do you follow up?
• How long have we been referring clients like this?
• How much can I expect to make from your referrals?
• Do you pre-qualify the referrals?
• Will I close each referral you send?
• How long will it take to close a referral?
• Do you limit this to one agent per city?
• How do I get more referrals?
• Will your referral program policies change?
• What do you mean when you say you like to delegate up?
• How do I get signed up to receive referrals?
• What about the exclusive sponsorship program without referral fees?

If there is something that needs clarification, let me know and I can add to or otherwise modify the FAQs. If you have a question or questions that I have not answered, let me know and I will add it.

Thank you! I am looking forward to referring business to you and working with you in the future.

Until my next post,

James

In my previous articles I talked about some of the benefits to investing in real estate. If you recall, there are six distinct benefits to investing in real estate. They are income, depreciation, equity build up, appreciation, leverage and control.

In this article I will be talking to you about the one that tends to be the biggest contributor to your return on investment and that is appreciation.

First, what is appreciation? Appreciation is the tendency for house prices to rise over time.

Now, before we get too far into this–and especially in our current real estate market–I want to address the idea that house prices go down. Can house prices go down? Yes. Can house prices stay the same? Yes. Can house prices go up? Yes.

If you look back over the last 50 years or so, you will see that house prices have trended up at a rate of over 6% each year. Have there been down years? Yes. Will there be down years in the future? I imagine so. However, inflation tends to make things more expensive over time and housing is no exception.

So, I expect house prices to rise over time even if we do have some short term dips in housing prices.

So, what is the big deal with appreciation when you are investing in real estate? Well, let’s look at a quick example.

Let’s say you purchase a $100,000 house. If housing prices are appreciating at 5% per year (remember the actual average is over 6%), then at the end of the first year, the house would be worth $105,000. At the end of two years, it would be worth over $110,000. In fact, in just under 15 years, the $100,000 house would be worth have doubled in value and would be worth over $200,000

If you had a 30 year mortgage, by the time your tenant’s have paid off your mortgage, the house would have double twice in value… from $100,000 to $200,000 and $200,000 to $400,000. So the one little $100,000 house you purchased and let your tenants pay off would be worth $400,000 in 30 years with a modest 5% per year appreciation rate.

So, to become a millionaire, just buy two and a half (why not just make it three?) houses for $100,000 and keep them as rental properties for 30 years as your tenants pay off the mortgages.

That’s the benefit of appreciation to real estate investors.

Until my next post,

James

There are really six benefits to investing in real estate and they are income from the property, depreciation, equity build up, appreciation, leverage and control. Today, I’d like to talk to you about one of the few ones that, if you actually pay your loan, is guaranteed: equity build up.

Each month that you make payments on an amortized loan (a loan that you pay back what you owe over the term of the loan), a small amount of your payment goes toward paying back the amount you owe. At first, this amount is small… less than 1% of each payment of a 30 year loan is actually paying off principal in the first year, but over time with each payment, the amount you are paying off increases.

Even if your property value were to stay the same (and you will see the historically home prices have gone up), you are building up equity in the property by paying down what you owe on the property.

What’s great about this? Usually, with rental property, it is not you that is making the payments to build up your equity. Who is it? Your tenants.

Each month that a tenant makes a rent payment to you, you take part or all of it and pay the expenses on the property including taxes, insurance and, if you have a mortgage on the property, then a loan payment too. Well, part of the payment that the tenant made is paying down that loan and so your tenants are actually paying down your loans for you.

Until my next post,

James