Here’s the Q+A from this mornings KXL interview:
For many people one of their new years resolutions is to invest more this year. We talk with our real estate expert nick krautter about the basics of investing in real estate.
Q – What’s the most important part of investing in real estate?
A – Cash flow is the most important part whether you’re paying cash or getting a loan. CAP rate and Gross Rent Multiplier are just ways to compare on investment to the next.
Q – Can you get a loan if you’re an investor?
A – Yes! in some cases for as little as 10% down. Most investor loans require around 20-30% down and rates are fantastic. One of the best things happening now is positive leverage.
Q – Explain positive leverage to us…
A – Positive leverage means that the property is giving you a return that is higher than the interest rate of the loan. This multiplies the return on investment and can take an 8% return property and make it a 17% return or higher!
One last piece of advice: If you buy a fixer you need to factor in the cost of repairs AND the lost rent for the time the property is under construction in order to really compare it to the cost of a turn-key rental.