The successful investors allocate investment as asset classes returns completely correlated wh other. Mt he assets cash, equities (stocks), debt instruments (bonds) real estate. asset class, real estate, frequently under-represented investors’ portfolios, real estate adds it element stability investor’s returns, owing remarkable stability real estate appreciation time compared or asset classes.
Real estate bn under-represented be gd property investment vehicles bn easily available. investors, tr home bn main real estate investment. Os he branched Real Estate Investment Trusts (REITs), increasingly popular recent years. REITs offered gd liquidity, overall returns (especially recent years), tend volatile, wh returns tt vary widely year-over-year. or drawback REIT dividend income taxable ordinary income tax rates; bt suited tax-advantaged accounts, sh 401(k) plans IRAs.
Many fortunes real estate he bn amassed buying holding properties generate significant returns cash flow appreciation, taking advantage tax benefits, notably depreciation, long-term capital gains tax treatment, ability defer tax liabilities th 1031 tax-deferred exchanges. Buying holding properties offers returns, stability, tax advantages available.
Meridian Pacific’s objective provide investors wh real estate investment alternative REITs buying holding cash flow properties superior returns low volatility wh tax benefits direct real estate ownership.
Meridian Pacific Real Estate Investment Philosophy
While myriad successful investment models real estate, share oy following fundamentals build financial wealth:
- Cash flow growth
- Equity build-up
Most homeowners familiar equity build-up, driven appreciation home and/or paying mortgage balance time. Equity build-up increases one’s net worth real estate assets.
Cash flow relates deriving rental income excess all cash obligations costs incurred, including servicing mortgage debt. extent costs reduced rents appreciate, cash flow grow time.
Some mt stable investment models combine equity build-up cash flow growth. property Meridian offers sale, pre-tax gains cash flow growth equity build-up added projected period set modest assumptions at property, rent, expense appreciation. resultant total return investment (ROI) tn expressed compound annual growth rate, CAGR. ROI CAGR single metric judging investment potential individual property, compare real estate investment returns investment classes, sh equities (stocks). Meridian seeks achieve 10-year ROI CAGR gr 18% or ten-year period investors.
Meridian Pacific Properties offers buy-and-hold investment opportunities tt seek combine appreciation equity build-up cash flow growth. Meridian acquires, renovates, sells single multi-family residential properties Jackson, Mississippi, usually tenants ay place. properties selected wh strict specific criteria relating property appreciation potential, cash flow growth, risk. careful choose desirable suburban locations neighborhoods inner city optimize appreciation potential.
Importantly, focus providing hh cash flow properties, meaning tt putting little 10% dn property, investor wl realize positive cash flow, en ar expenses related vacancy, repairs maintenance, property management fees, taxes, insurance, mortgage payments. investors choose structurally cosmetically sound properties, obtain excellent tenants, professional property manager.
Meridian guides investors th entire investment process. assist wh choosing specific properties investment, putting purchase contract, obtaining mortgage, setting legal entity hold property (optional recommended), gg th closing process, getting pre-qualified property management place. investor pursuing properties pursuant tax-deferred 1031 Exchange we assist wh providing qualified accommodator.
Investment Risks Risk Mitigation
Investing forms entails risk, wl kn investors investments me risk associated tm tend yield returns. challenge—and opportunity— mitigate risk knowledge managing risks tt controllable.
The list intended comprehensive, rr dl primary risks investing residential real estate:
High vacancy rates. simple enough: vacant properties don’t generate rents, harms cash flow. Vacancy rates harmed sh factors broken leases tenants, preponderance transient versus long-term tenants, tenants damage properties be vacating (extending repair maintenance time), ineffective property managers slow re-lease properties wn vacant, damage natural man-made disasters (i.e. fire, flood, wind).
Meridian Pacific property managers carefully screen backgrounds prospective lessees be leasing properties look “5-star tenants” meet internal criteria housing turnover, employment, credit, criminal history mitigate risks vacancy, non-payment rent, causing property damage creating disruptions. Meridian guarantees behavior tenants sign lease, goal improve odds getting vacancy rates 7-8% industry average.
It key outstanding property manager manage properties. property manager lynchpin getting rents, tenants low vacancy rates. Meridian happy provide property manager references.
Failure pay rent. Inevitably tenants encounter difficulty meeting tr lease obligations fail remit rent time. We result poor financial management, te unplanned changes circumstances create financial difficulties, loss employment, disability, death illness family member, divorce, etc.
Well-written lease agreements contain provisions security deposits td unpaid rent, late payment penalties define eviction process. wh mitigating risk vacancy, pre-screened tenants strong property manager increase odds uninterrupted rents. Compared or regions, Jackson enjoys “landlord friendly” laws; eviction necessary, 4-5 week process, months or states.
Excessive repair maintenance costs. All properties repairs maintenance associated normal wear tear roof, paint, carpeting, plumbing, appliances, landscaping, like. larger expensive home is, costs tend be. Repair maintenance costs tend excessive tenants cause damage, wn property time purchase lot deferred maintenance required, te weather damage.
Meridian takes pride standard renovate properties. specific criteria tt properties meet wl offer investors. Well-maintained properties extremely desirable command rents tenants. minimize deferred maintenance costs ey ys acquisition. Also, careful screening tenants helps reduce damage caused tenants.
Owner liability. Property owners subject risk tenant lawsuits property damage. Maintaining liability insurance coverage $500,000 property important. investors purchase supplemental umbrella insurance coverage supplement liability insurance. investors hold investment properties Limited Liability Company (LLC) addition property and liability insurance.
Meridian pleased assist investors finding insurance agent and, desired, provide guidance help form LLC holding properties.
Lack property appreciation. Te assurance particular property appreciate year-over-year, depreciate. Appreciation affected factors local demographics, crime rates, quality school districts, or homes neighborhood maintained, property question maintained, it rates, regional unemployment rate, local inflation cost living rates, growth wage rates, natural man-made disasters, proximity shopping transportation, supply demand housing, similar factors, ne few. neighborhoods, weights factors vary greatly. Se te variables controllable selecting properties begin with, predictable, kinds natural disasters. course time, appreciation rates vary according changes factors.
Meridian selective properties tt procures. ct guarantee appreciation rates, acquire specific Jackson, MS properties carefully chosen neighborhoods improve odds long-term appreciation. Wh local associates ground Jackson, stay close gg community assess impact change properties. Fortunately, properties provide excellent cash flow, reliant appreciation deliver exceptional returns.
Kevin Conlon co-founder Meridian Pacific Properties.
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