How to Amass a Real Estate Empire

Video Transcript

"Hello, my name is Penny Smith, and I'm a real estate broker in North Carolina. The question today is how to amass a real estate empire. If you're looking to build a fleet of rental properties that could carry you as an investor into your retirement, it is a great time for that, especially with the downfall and down-cost houses are taking at this time. The way that you need to keep this in mind, though, is that because you are not occupying these homes and you are using them for rental properties, you will have to have special type of financing with the mortgage broker. Mortgage brokers will require more down payment. There will be a higher interest rate than for a personal loan that you are trying to get for a residence that you intend to occupy. And there will also be the factors of maintenance and taxes and so forth. Downtime for the rental time frame that you will have in which the property is not making you any money because there's nobody living in it. You need to factor in that point of time. You want to make sure that it is at least worth 75 percent of the rental income that you are receiving for that house. That way, you can capture the majority of the money of your monthly payment every single month. And you will also have a tax write-off for depreciation for that house. That is the wonderful thing about our government that does give tax write-offs for depreciation on investment properties. So maintain, at least, a 75 percent value of the tax payment and...in the rental cost, and also calculate to have at least a little bit of downtime in which the house is not rented every three years. That is the national average. And that is how to build a rental empire."