Didn't Win the Powerball?


Author: Erika Buse


The chances of winning the $759 million Powerball were approximately one in 290 million. you're more likely to get struck by lightning, attacked by a shark, and hit a hole-in-one all on the same day. So if you played and lost, it's probably not a huge surprise. If you're looking for more reliable ways to build wealth, consider investing in real estate and generating some passive income. The Bellingham rental market over the past two decades has been robust, with residential rents increasing 9 % since last year. (According to Zillow).

Larry Simpkins, who has been rental owner for over 30 years says, “Being a rental owner has been a profitable endeavor for us over the years.  Using the rental income to pay for the mortgages can be a smart business plan. Owning rentals is not a get rich quick thing but for the right individuals it is a slow and steady way of building financial security”.

Owning rentals is not as cumbersome as some people may think; as you can hire a property management company for less than 6 percent of the yearly income.  Not only are you generating monthly cash flow, but Uncle Sam allows you to take advantage of depreciation which has a significant positive impact on your Internal Rate of Return. Similar to owning stocks, investing in rentals involves a certain level of risk. Understanding the expenses and factoring in potential vacancies is critical to protecting your downside. Not into spreadsheets and calculating deprecation or the IRR? No problem, call us for a sample of our rental income worksheets. These worksheets help us identify good potential buys.

Rentals can also be a good option for folks who are willing to owner occupy. On both conventional Fannie Mae loans and loans backed by the Federal Housing Administration, a portion of the anticipated rental income can be added onto the borrower’s income at application, which helps people qualify for more house than they normally would. The loans are available for owner-occupied properties with 4 units or less.

Investing in income producing real estate is a great way to generate passive income and diversify your investment portfolio. Bonus point: When you invest in real estate, you are buying physical land or property, there is a certain level of security when you can physically see your investment in the ground. Feel free to call us to chat about entering the rental market. *If you are comfortable relying on Powerball to come through for retirement please disregard the above article.