Minneapolis Real Estate Investing & Real Estate Financial Planning™ Podcast

Deal AlchemyTM - Residential vs Commercial Property

Deal AlchemyTM is all about manipulating the returns you're earning on your investments. Often, this is done through the choices we make when selecting the investment property and the strategies we choose to implement.

For example, you could choose to invest in residential properties where your tenants would live in the property. Alternatively, you could choose to invest in commercial properties where your tenants do not live in the property.

Often, these investments would have different numbers and characteristics, such as who pays taxes, insurance, and maintenance on the property. However, for the sake of today's mini-class, we will look at just the difference in the tax benefits of depreciation in two identical investments, except one is residential and the other is commercial, to see how that impacts your overall returns.

In this class, James discusses:

• The definition of alchemy
• What is Deal AlchemyTM
• How to manipulate returns and move them between quadrants
• An example by purchasing a commercial property with 39-year depreciation schedule instead of a residential property with a 27.5-year depreciation schedule
• Plus much more...

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Minneapolis real estate investor podcast? Book a free consultation to discuss.

Property prices and interest rates are currently high, while rents are not keeping up. Achieving cash flow has become even more crucial and challenging than ever, despite our 88 strategies to maximize it.

One common question that arises is whether it is better to purchase rental properties with 20% down payments or to invest in stocks. Buying rental properties with 20% down allows you to use leverage, which can significantly magnify both good and bad returns. Therefore, selecting the right investment property is crucial to your success or lack thereof.

To be fair, you could also leverage yourself by investing in stocks to a lesser degree. However, we won’t be discussing this in this particular comparison class.

Owning rentals requires a more active approach than passively investing in stocks. Is the extra work worth the extra effort? How much better or worse is it?

In this special class, James will compare the two strategies across 300 US markets, as the numbers differ depending on local market prices, rents, and income. Which strategy - 20% down or stocks - leads to a higher net worth? Which gets you to financial independence faster? Which is safer, and which carries more risk? And much more.

After attending this class, you should have a clearer understanding of whether you should seriously consider saving up 20% down payments to acquire up to 10 rental properties or take the easier route of passively investing in the stock market.

Check out the video and interactive charts from this class here:

https://RealEstateFinancialPlanner.com/model/20-down-payment-versus-stocks/

Or, see Minneapolis specific, detailed analysis of a variety of strategies here:

https://RealEstateFinancialPlanner.com/model/MN/Minneapolis/

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Minneapolis real estate investor podcast? Book a free consultation to discuss.

The NomadTM real estate investing strategy has you buying properties as an owner-occupant, living in them for at least a year... to fulfil your obligations to the lender for getting a low/nothing down loan with better interest rates... then converting them to a rental and moving into a new property.

Repeat this until you have the number of rental properties you desire.

But, how does the NomadTM real estate investing strategy work in Minneapolis with Minneapolis housing prices, rents, taxes, insurance and rents with today’s interest rates?

How quickly can you achieve financial independence using the strategy?

How risky is the strategy?

In this class, James will walk you through the basics of the NomadTM real estate investing strategy including all the assumptions we used for Minneapolis and you can see exactly how effective... or ineffective... the NomadTM strategy is in Minneapolis with Minneapolis, Minnesota numbers.

BONUS: Plus, you’ll be able to copy the Scenario into your own Real Estate Financial PlannerTM account to modify any of our assumptions that you think we might have got wrong and see how that impacts the plan.

James has modeled just over 300 different US cities for this class for you to choose from, jump right to Minneapolis:

https://RealEstateFinancialPlanner.com/model/MN/Minneapolis/

Watch the video version of this class:

https://realestatefinancialplanner.com/real-estate-nomad-in-your-city/

Resources Mentioned In Class

• Cash Flow Power MeterTM - Learn about the Cash Flow Power MeterTM that appears at the top of assumptions for every property.
• Return QuadrantsTM - Learn about all the different Return QuadrantsTM and how we use them to show you how a property is performing.
• Everything You Learned About Deal Analysis is Wrong – ROIQ+RTM - A full class on the Return QuadrantsTM and both the why we use reserves in our return calculations and how to use reserves when doing these cacluations.
• Model - Select YOUR CITY and see the Baseline NomadTM Scenario.
• Real Estate Investor FIRE - Learn about the different types of Financial Independence Retire Early (FIRE) for real estate investors with this full class.
• Asset Allocation Secrets of Real Estate Investors - Learn about asset allocation for real estate investors in this special class recording.
• The Ultimate Guide to Private Mortgage Insurance - Learn all about Private Mortgage Insurance (PMI) in this special class recording.

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Minneapolis real estate investor podcast? Book a free consultation to discuss.

Learn more about modeling your real estate investing strategy in CityName using a variety of different rules in the Real Estate Financial PlannerTM software.

Watch the video version of this class:

https://realestatefinancialplanner.com/modeling-your-real-estate-investments-rules-overview/

Resources Mentioned In Class

• Real Estate Financial PlannerTM Software - Get a free account on the Real Estate Financial PlannerTM software to do your own modeling using the rules described in this class.
• Cash Flow versus Appreciation - A full class comparing investing in a market that has great cash flow versus a market that has great appreciation.

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Minneapolis real estate investor podcast? Book a free consultation to discuss.

You can purchase a property in Minneapolis, Minnesota using an FHA loan with just 3.5% down. Heck, sometimes you can even get down payment assistance to help with the 3.5% down payment.

But there are other loans with lower down payment options.

However, when you put less than 20% down, FHA loans require you buy insurance to protect the lender in case you default on the loan.

This insurance... called Mortgage Insurance Premiums (MIP) for FHA loans or the equivalent of Private Mortgage Insurance (PMI) on other types of loans... has both an upfront premium and a monthly premium.

And, with FHA loans this monthly premium NEVER goes away... even when you pay down the loan to well below 80% loan-to-value.

With this Mortgage Insurance Premium (MIP) that never goes away... does that mean that FHA loans are for suckers?!

Well... not so fast... in this class we will talk about the pros and cons of FHA loans and see if they’re really just a sucker’s loan or if Minneapolis real estate investors could utilize FHA loans in a beneficial way.

See the charts and watch the video version of this class:

https://realestatefinancialplanner.com/are-fha-loans-for-suckers/

Resources Mentioned In Class

• The Ultimate Guide to Private Mortgage Insurance - A full class on Private Mortgage Insurance.

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Minneapolis real estate investor podcast? Book a free consultation to discuss.