Are you interested in a secure financial future for your family and children? I am too. Here’s a small example on why I feel so strongly about creating wealth through investing in multifamily real estate.
As a parent, family person, or individual, one of the best decisions you can make is the right investment early on that will help take care of all the financial problems and needs of the future.
I am going to share with you a real example from my own life of how using an investment of $35,000 I secured a multifamily property generates $24,000 annual cash flow and will earn approximately a quarter-million dollars of equity over the next 12 years! Starting with that $35,000 investment, my wife, Lisa, and I secured a college fund, living expenses, and monthly income for our newborn son. Here’s how it happened…
About four years ago we had an opportunity to buy a mixed-use property (three apartments and one store) in Wilkes-Barre, Pennsylvania. It was not a big property, but we liked the location (five minutes from new casino) and felt it would be a good long-term hold.
The purchase price was $65K but it needed $75K in renovations, which brought the total investment to $140,000. At the time we only had about $35,000 in cash budgeted for this, so I called an investor I had worked with in the past and he agreed to lend $105,000 at 10% for 1 year.
We closed on the property, had the renovations complete in three months, and the property was 100% occupied within eight months producing over $3,000 per month in income. Now for the best part: The beauty of commercial real estate is that if the cash flow is there, banks are willing to lend.
We have a friend that works in the commercial banking department at a small community bank in Pennsylvania. I called him up to inquire about a commercial loan on the income property and he told me it wouldn’t be a problem, I just needed to send over the package with income and expenses, the leases, the work completed, and a little background on myself.
Thirty days later I saw how easy it was to create wealth through multifamily real estate. I walked into the bank and was handed a check for $105,000 at 6.5% for 15 years, and it was under my company name. I immediately paid the investor off. Now, three years later, the property generates positive cash flow and only has 12 years left on the mortgage. In just 12 years, we will be making more than $24,000 in yearly cash flow and have accumulated over $240,000 in equity.
This is not a massive skyscraper deal, but it is an illustration of what you can do when a good opportunity pops up. As an investor you are armed with the right knowledge.
My son is just over a year old, and by the time he’s 12 that property will paid off completely by the tenants, and he will basically have an entire college fund along with cash flow at his disposal!
Now scale that scenario up to a 40-unit building — all you have to do is add a zero, the principles are the same! It is possible for you to create wealth for yourself through the purchase of an income-producing multifamily building just like we did and be on your road to increased cash flow and net worth.