The Big Opportunity In Raleigh is Owning Rental Properties

May 1, 2022 by Kevin Martini

The big opportunity today to create generational wealth is in real estate; not just as a homeowner but also as a real estate investor. Episode 141 of the Martini Mortgage Podcast unpacks just 3 financial benefits of owning an investment property; passive income, tax benefits and appreciation.

Questions, just ask the Martini Mortgage Group

Let’s connect to discuss how to add an investment property to your portfolio or to talk about acquiring your first rental property.

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Martini Mortgage Podcast Episode 141 Transcript

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We all need a roof over our head, every night, when we put our head on the pillow to go to sleep. Some people own that roof and some people rent that roof. Here is the challenge, some people rent because they do not know they can afford to buy and that is sad. Others rent because it is right for them.

It is true, homeownership is not right for everyone and that is OK however, I truly believe, if you want to create wealth and when I say wealth I mean generational wealth, you need to own real estate.

Welcome to episode 141 of the Martini Mortgage Podcast, my name is Kevin Martini and I am a Certified Mortgage Advisor with the Martini Mortgage Group which is located in Raleigh, North Carolina however myself along with my very talented crew of mortgage professionals help families in all 100 counties of North Carolina and pretty much in ever state in the U.S. too. I am calling this special episode of the Martini Mortgage Podcast; The Big Opportunity.

I want to start by sharing there is a time to rent however that time is not now. But as I mentioned homeownership is not right for everyone. I get sad when people rent because they do not think they have options to buy. Let me share this fact. Everyday I help families secure a home loan with less than a 20% down payment…everyday I help families secure a home loan with less than perfect credit and many first time home buyer are eligible for a first-time home buyer tax credit. If you are a renter, you woe it to your self to explore the options and then make a decision if homeownership is right for you after you have all the facts because there is never a substitute for getting educated on your homeownership options.

I share this so you know I am here and it is a big opportunity to explore your homeownership options if you are a renter but an even bigger idea or the ‘ big opportunity’ of this episode is to create generational wealth with a real estate rental portfolio that creates passive income, provides tax benefits and provides asset appreciation.

Passive income, tax benefits and asset appreciation, OH MY! Sound too good to be true but it is for many of the families I work with as their Certified Mortgage Advisor.

Now before you start thinking of all the reasons why this episode of the Martini Mortgage Podcast is not right for you and before you start reciting in your mind all the reason why you cannot afford a piece of investment property let me share this fact with you…it is my opinion you cannot afford not to have a real estate investment portfolio even if it is just for one property. Please give me your ears to expand on this big opportunity.

Let me start with a fact, investors are behind 33% of the purchases of single family homes today in the U.S. so, this means 1 out of 3 single family homes are purchased by investors. Now the Martini Mortgage Group has its headquarters in Raleigh, North Carolina and in Raleigh nearly 1 in every 4 properties are sold to an investor based on the most recent data which is from the 4th quarter of 2021. Yes, this is an amazing stat and it highlights a big opportunity for you and it is not too late for you take advantage of this big opportunity.

I am a real estate investor and I share this not to impress but to impress upon you that I have first hand confirmation it is easier to make one-million dollars with real estate then it is at your 9 to 5 job. To purchase all of my family investment properties I use one of the most powerful tools available and that is leverage.

Simply put, leverage is the use of borrowed money to secure an assets to amplify the potential return on investment. Let me granular, let us say I want to purchase a single family home and make it an investment property…I put a 20% down payment and I secure a 80% mortgage. My 20% down payment means I am leveraging 80%. Oh by the way, the 20% down payment is used only for illustration of purchasing an investment property. If you were purchasing a primary residence you may not even need a down payment or if one is needed it may only be 3 to 5% so your leverage could be as high as 100% to 95%.

Now that you have a working knowledge of leverage…let me start to chat about passive income, tax benefits and asset appreciation.

I believe, to become wealthy and to create generational wealth you need to have multiple forms of income streams. One obviously income source is from your job, this is active income. You have to actively do something like go to work and do your job for active income. Then there is passive income. I define passive income income as income earned outside of your job. One way to earn passive income is by owning a rental property or properties vis-a-vis positive cash flow. Let me illustrate…

You purchase a $250,000 rental property and you leveraged 80% of the purchase which means you put 20% down and that is $50,000 and you secured a $200,000 mortgage. For illustration, let us assume a 7% interest rate for a 30-year fixed. Again, this rate is only for illustration. A $200,000 30-year fixed rate mortgage would have a principal and interest payment of mortgage of $1,331.60 a month. Let us assume that the property tax and the homeowner insurance is $3,000 a year which is $250 a month. This means your total mortgage payment, in this hypothetical example, would be $1,582 a month.

Let us assume that repairs and miscellaneous things like advertising the property cost you 2,400 a year. No me, I factor in 1-moth or mortgage payment to cover for vacancy — so the operation costs would be, let me round up and say $4,000 or $334 a month.

A conservative rental in Raleigh would be, let us just say $2,000 a month, perhaps that is too conservative but let me go with it.

You are paying principal, interest, tax and insurance of $1582 with this high example rent and we are forecasting $334 a month for incidentals so that is $1,916 a month. So worse case with this conservative rent of $2,000 you would have a passive income $84 a month or be positive cash flow of $1,000 a month.

What if the rent was more realistic at 2,250 a month. You would be creating $2,250 a year of passive income vis-a-vis positive cash flow from your rental property.

But as they say in those informercials, but that is not all…

There may be the potential for major tax benefits for owning a rental property. Know that I am a Certified Mortgage Advisor not a Certified Public Accountant so please consult with your tax prepare. With hat aid, for me, owning rental properties allows me to deduct my operating and owner expenses plus I get to depreciate the property and I have capital gain referral.

I do not want to go too deep into this but I do want to talk about the power of the depreciation deduction. You see the current IRS code allows one that owns a rental property to depreciate it over 27 and half years. Let me use that $250,000 rental home I mentioned earlier. $250,000 divided by 27.5 equals $9091. You can use that depreciation to expenses to lower your tax liability along with your other expenses.

Yes, the tenant is paying for your mortgage and providing you with passive income with positive cash-flow, you are getting tax benefits and that is not all, you will also get asset appreciation through appreciation from your rental property.

Before I dive deep into this, let me address two topics that are top of mind for some people are concerned about with real estate today. Number one is some people are concerned that there will be a recession and the recession will impact home values negatively. Some people fear we are approaching a a real estate bubble.

Let me address bubble…today we are in a materially different market than we were in 15-years ago. The demand for homes today is real unlike the artificial demand created by lower lending standards before the great recession. In short, it is my opinion the great recession in real estate was created by many unqualified borrowers being able to secure a home loan and that home loan went into foreclosure. Today, you need more than a pulse to qualify for a mortgage and the bad industry actors have been flushed out however there is going to be a recession. It is not if a recession will come because recessions are a natural part of the economic cycle and it will come however recession does not mean housing crisis nor does inflation mean lower home values.

As I am recording this episode, inflation in the U.S. is at a 40-year high. Owning real estate is a hedge against inflation. In fact, tangible assets, like real estate, tend to increase in periods of high inflation.

Speaking of home values…

I have found the best and most accurate real estate value predictor is the Home Price Expectation Survey. It is done every quarter and it is not one persons opinion on where home values will be headed. A panel of over 100 plus economists, housing market analysis and investment strategist are survey and the result is the Home Price Expectation Survey.

In the most recent survey, basically they are forecasting a cumulative 25% increase in home appreciation through the end of 2026. Let me put share what that means using that $250,000 investment property we talked about earlier. If you would have purchased it in January 2022 then by the end of 2026, according to the Home Price Expectation Survey it would be worth $346,342. So during a period of 5-years, you potential growth in wealth, solely based on appreciation would be over just under $100,000. Then pepper in the passive income received and the tax benefits and you are creating generational wealth.

WOW, that was a lot wasn’t it. Now you know why I called this episode The Big Opportunity

I believe in owning your dream home and I help families secure the the right financing for their dream home. I also believe in investment properties and I help families deploy the right financing strategy for their real estate investment portfolio. I know it should always be home loa n first and then go find your house so with that said, let us connect to talk if investment property is right for you and your family.

My name is Kevin Martini and I am a Certified Mortgage Advisor with the Martini Mortgage Group. I provide trusted advice with a frictionless process that offers great rates and certainty to you and your family. My number is 919.338.4934.

Looking forward to connect, stay safe out there and wishing you peace and blessings.

Now it is time for the disclaimer:

This material has been prepared for marketing purposes only. This is not a loan commitment or guarantee of any kind.

Loan approval and rate are dependent upon borrower credit, collateral, financial history, and program availability at time of origination.

Rates and terms are subject to change without notice.

The Martini Mortgage Group at PCL Financial is a division of Celebrity Home Loans, NMLS # 227765 with a Branch address of 507 N Blount St Raleigh, North Carolina 27604.

You can contract Certified Mortgage Advisor and Producing Branch Manager, Kevin Martini NMLS# 143962 by calling the Branch and that number is 919.238.4934. For a full list and more licensing information please visit: www.NMLSConsumerAccess.org or by visiting www.MartiniMortgageGroup.com – Equal Housing Lender

6 Financial Reasons for Homeownership in Raleigh, North Carolina

March 23, 2022 by Kevin Martini

Homeownership has so much to offer financially but it can also positively impact your life today and impacts future generations too! Raleigh Mortgage Broker and Certified Mortgage Advisor Kevin Martini published a special episode of the Martini Mortgage Podcast highlights 6 Financial Reasons for Homeownership.

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Raleigh Homeownership Provides Leverage

Leverage is the use of borrowed money to increase your return. Housing is one of the only leveraged investments available today.

Raleigh Homeownership Locks In Your Housing Costs

The only way one can escape rising rents is to consider purchasing a home and locking in your monthly housing payment with a fixed rate mortgage payment.

Raleigh Homeownership Is Usually A Form Of Forced Savings

Every month when you write the check for your mortgage you are not only paying interest, you are also paying principal.

Raleigh Homeownership May Provide Substantial Tax Benefits

If you itemize your taxes you may be able to deduct the mortgage interest you pay on your Federal taxes and State and Local Taxes (SALT) may also be tax deductible on Federal and State taxes too.

Raleigh Homeownership Provides Protection From Inflation

Owning a home is typically a hedge against inflation.

Raleigh Homeownership Provides Non-Financial Benefits

When considering to buy a home you need to to have price and cost clarity of the the dollars and cents but you cannot forget to weigh the non-financial benefit that could truly change your life.

It is never too soon or too late for homeownership

It is never too soon to explore your homeownership options…it is never too late to explore your homeownership options either. If homeownership is right for you and your family then know this…the first step is always the loan not the home.

There is never a substitute for having price and cost clarity before you start looking for a home. Get pre-approved before your home search not just pre-qualified! To a seller a pre-qualification says you are just ready and willing whereas a pre-approval with a Certified Mortgage Advisor with the Martini Group says you are ready, willing and able. It also communicates to the seller you are making a ‘same-as-cash’ offer and that is important to share in any market, especially in a tight real estate market like we are in today.

If you want trusted advice with a digital mortgage process that offer a great rate call either Logan Martini or Kevin Martini with the Martini Mortgage Group.

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There is nothing wrong with renting. In fact there is a time to rent however that time is not now. Do not fret, I am going to unpack this bold statement in a few moments in this special episode of the Martini Mortgage Podcast.

Welcome and thank you for tuning in, my name is Kevin Martini and I am not just the host of the Martini Mortgage Podcast, I am also a Certified Mortgage Advisor with the Martini Mortgage Group which is located in downtown Raleigh, North Carolina. We may have our headquarters in North Carolina however myself and my crew help families all over the U.S. create generational wealth with financing real estate.

Episode 135 is called – 6 Financial Reasons for Homeownership you could also call this episode 6 reason to buy a home in Raleigh or anywhere city in North Carolina or any city in the U.S. for that matter.

Now let me share, recently I was a the grocery store buying my Cocoa Pebbles, yes – – – you know he cereal, and yes, it turns the milk chocolate. Any who, I heard someone say:

‘Excuse me Mr. Martini’

…I immediately got excited because I thought my dad was in the cereal aisle at the grocery store with me but then I realized the chap was talking to me. I responded by saying…

‘I know I have been in the financial services since the mid 80’s however I am just Kevin, my dad is Mr. Martini’

The young man’s name was Stephen and he is a younger millennial an he asked me if he should buy a home now or wait. My response was not yes not no — it was, ‘it depends’.

I know what you are thinking, I should of just said ‘ yes you should’ but if I did that it would be wrongs. You see no one on YouTube, no one on Facebook or Instagram and no one on a Mortgage Podcast or any podcast for that matter and most definitely no mortgage app that can take you to the moon on a rocket can tell you if it is a good, or a smart idea for you to buy a home. Homeownership is right for many but not all. You see, every family I have the privilege to work with is different. There is not a cookie cutter response to Stephen’s question.

Think about this for a moment…getting a mortgage is a big deal, it is a financial instrument just like a stock or a bond that you may buy in your portfolio. You would never buy a stock without making sure it properly fit into your portfolio, would you? You should not just buy a house because someone says you should…everyone is different.

Listen, if you are looking for someone that who just peddles mortgages, then hit the stop button because this is not me! Again, for many, buying a home makes sense — for some it does not. This is something I can help determine when we first connect together. With an open heart, in order to create generational wealth, one needs to own real estate. If homeownership is right for you taking action sooner than later could save you tens of thousands.

Now if buying a home is right for you and your family then I want to share some of the financial benefits associate with buying a home and getting a mortgage with the Martini Mortgage Group with PCL Financial. In this episode, episode 135 of the Martini Mortgage Podcast, I am going to share 6 Financial Reasons to Buy a home.

Are you ready? Let is start making this mixing this cocktail.

Number 1 is leverage.

Housing is one of the only leveraged investments still available today. Simply put, leverage is the use of borrowed money to increase your return. To illustrate let us assume that you want to buy a home in Raleigh and home is priced at say $500,000 and you have twenty percent saved. For this that are not quick with math, 20% of 500,000 is 100,000.

So let us look at the transaction in detail…You would buy the home for $500,000 and you would put 20% down, that is $100,000 and you would get an epic mortgage rate on your $400,000 mortgage with me, Kevin Martini, your Certified Mortgage Advisor.

Now let us fast forward say 1-year…in other words, you own the home and you secured the mortgage and you are moved in and lived there for 12-months. For purpose of conversation, let us assume the home appreciation is 5%.

This $500,000 home you purchased just 12-months ago is now worth $525,000. Assuming this is your only asset, your net worth is now $525,000.

Now think about this, let us say you did not buy a $500,000 home in Raleigh and let us assume that you purchased a one-hundred thousand dollar home for cash in Raleigh 12-months ago. Using the same 5% appreciation in the previous example, then your net worth would be $105,000. Make sense so far?

OK, what does it mean? With leverage you made $20,000 more!

Let me share a quote from the Joint Center for Housing Studies at Harvard University on this topic…and I quote:

“Homeownership allows households to amplify any appreciation on the value of their home by a leveraged factor.” End quote.

The Number 2 of 6 financial reason of homeownership is crazy simple and so very obvious but many people miss it.

You are paying for housing whether you own or rent.

Here is a fact, when you rent you are paying for a mortgage, you are just paying your landlord’s mortgage for them.

For the people that were multitasking let me say it again,

when you rent you are paying for a mortgage, you are just paying your landlord’s mortgage for them.

I mentioned earlier that there is nothing wrong with renting and there is a time to rent and that time is not now in my opinion. Census data shows the median monthly rent continues to go up year after year, in fact, since 1988 it has just gone up and up and up. The only way one can escape rising rents is to consider purchasing a home and locking in your monthly housing payment with a fixed rate mortgage payment. I truly believe that homeownership is a much more stable long-term investment.

Perhaps your concern is credit score or that you are self-employed or maybe it is the down payment required.

On the topic of credit score, I think you will be shocked to know that there are home loan solutions that the Martini Mortgage Group offers families that have experienced a bump and a bruise in the past. I get it, bad things happen to good people and the the bad thing that you have moved passed does not need to prevent you from owning a home.

Perhaps a limiting belief is that you are self-employed…many of the families I work with was a Certified Mortgage Advisor are self-employed and they have a very creative accountant. This week, my business partner and fellow mortgage strategist, Logan Martini helped a self-employed person to qualify for a mortgage just using his bank statements for the last 24-months and we did not even look at his tax returns.

Another concern is downpayment, there is a common misconception in the marketplace that one needs to have a 20% down payment to buy a home. One does not need to make a 20% downpayment to secure a home loan. With with the Martini Mortgage Group there are low and no down payment mortgage solutions that we offer.

Remember you are paying for housing whether you rent or own. For me, if I am paying for something, I want to own it. Please do not let myths about credit score or downpayment or the fact that you are self-employed stop you for exploring your options. I said it earlier, homeownership is not right for everyone and it may or may not be right for you however you owe it to yourself and your family to see if it is right for you.

Let me extend an invitation to you, if you would like to have a confidential conversation with me, I am here, just go to CallWithMartini.com to get access to my schedule and book a time for us to connect or if you prefer, call me by dialing 919.238.4934.

The third financial benefit is associated with the fact that owning a home I usually a form of forced savings. Let me breakdown forced savings.

Every month when you write the check for your mortgage you are not only paying interest, you are also paying principal. When you pay principal you are reducing the amount you owe.

Let me illustrate. If you purchased a $500,000 home and you put 20% down and for example let us assume, for illustration only a 4% rate for with a 30-year fixed mortgage, just like the example we talked about earlier when we were discussing that housing is one of the only leveraged investments still available today.

In this example your Principal and interest would be, $1,909.66 a month. Every month when you make a mortgage payment you are retiring your debt every month.

In this example, you are making a forced saving deposit of $576.33 a month. In this example you are making a forced saving deposit of $6,915.96 a year.

There may be substantial tax benefits to owning a home and having a mortgage is the 4th financial reasons to buy a home

A unique financial reason to buying a home is if you itemize your taxes you may be able to deduct the mortgage interest you pay…assuming you are in a twenty eight percent tax bracket and for illustration ONLY, this would mean the month tax benefit for that $500,000 home we have been discussing would be $373.33 a month. The annual tax benefit would be $4,479.96.

When you rent there is no tax benefit nor ability to write off your rent on your Federal or State taxes however do not fret, your landlord most likely will get the benefits and I am sure your landlord is thankful you are participating to their forced savings.

Inflation is the 5th financial reason for homeownership and to buy a home.

Owning a home is typically a hedge against inflation.

Let me define inflation…inflation is a general increase in prices and a fall in purchasing value of money. At the time of this recording inflation is at a 40-year all-time high.

Housing costs and rents have tended over most periods of time to go up higher than the rate of inflation and for this reason owning a home is an attractive proposition because it provides a hedge against inflation.

Finally, the 6th financial reason for homeownership is the non-financial benefits of homeownership. I know it is crazy to say that a non-financial benefit is a a financial benefit but it is and sadly many people overlook the the feeling of gratitude, security, pride and comfort that homeownership offers.

When considering to buy a home you need to to have price and cost clarity of the the dollars and cents but you cannot forget to weigh the non-financial benefit that could truly change your life.

Let me wrap this special episode of the Martini Mortgage Podcast up with a recap the 6 Kevin Martini financial reasons for homeownership.

Number 1 , housing is one of the only leveraged investments still available today.

Number 2, when you rent you are paying for a mortgage, you are just paying your landlord’s mortgage for them.

Number 3, owning a home I usually a form of forced savings.

Number 4, there may be substantial tax benefits to owning a home and having a mortgage.

Number 5, owning a home is typically a hedge against inflation.

Number 6, homeownership provides non-financial benefits.

In closing, getting qualified and ultimately approved for the right home loan and getting mortgage for your home is NOT like shopping for the lowest priced gas for your car.

Listen, every mortgage company secures the money from the same source so everyone at the end of the day has the same mortgage rates however not everyone provides trusted advice with a secure digital mortgage platform that provides certainty like the Martini Mortgage Group provides. In addition, our job is not done after closing since it is our obligation, duty and responsibility to manage your mortgage for you after closing.

Thank you for tuning in to episode 135 of the Martini Mortgage Podcast which was about the 6 Financial Reasons for homeownership.

Thank you in advance for sharing this episode with someone you care about that may benefit from its contact.

If you want trusted advice with a digital mortgage process that offer a great rate with certainty check out my website by going to: www.MartiniMortgageGroup.com – you can find some real world information in the learning center and you can also securely apply online or book an appointment with me.

Now it is time for the disclaimer:

This material has been prepared for marketing purposes only. This is not a loan commitment or guarantee of any kind. Loan approval and rate are dependent upon borrower credit, collateral, financial history, and program availability at time of origination. Rates and terms are subject to change without notice. The Martini Mortgage Group at PCL Financial is a division of Celebrity Home Loans, NMLS # 227765 with a Branch address of 507 N Blount St Raleigh, North Carolina 27604. You can contract Certified Mortgage Advisor and Producing Branch Manager, Kevin Martini NMLS# 143962 by calling the Branch and that number is 919.238.4934. For a full list and more licensing information please visit: www.NMLSConsumerAccess.org or by visiting www.MartiniMortgageGroup.com – Equal Housing Lender

It is going to be a big day for Raleigh real estate today

March 16, 2022 by Kevin Martini

On the economic calendar is the Fed Interest Rate Decision! It is expected they will hike their benchmark Fed Funds Rate however it is CRITICAL to know the Fed does not directly control mortgage rates.

Let’s get technical with you for a hot second. Recently, the yield spread between the 10-year Treasury and 2-year Treasury has been trending lower. This increase in yield over time is known as the yield curve, which naturally moves up with maturity. But there is a phenomenon called an inverted yield curve, which has longer-term maturities yielding less than shorter-term maturities. This occurs when investors feel that prices in the future will decrease beneath present levels. When this goes inverted, it has been a very reliable recession indicator – YIKES!

Again, the Fed is expected to hike their benchmark Fed Funds Rate at their meeting on Wednesday March 16, 2022. This hike will push the short end of the yield curve higher, while the long end could move lower if it’s perceived that inflation is being reduced. This will cause an inversion at an even faster rate.

How will Raleigh real estate be impacted by a recession

If we are to see a recession, how will it impact housing? It is important to know recession does not mean housing bubble. Let me say it again, recession does not mean housing bubble. If look back at recessions since 1960, housing either remained essentially stable or increased in almost all of them.

Fresh on the minds of many is the recession in 2009. Please remember this fact, the recession was caused by the housing bubble, the recession did not cause the housing bubble. With the most recent recession in 2020, home prices rose.

Historically, home values perform very well during periods of inflation like we are experiencing today and during recessions too.

Is Raleigh real estate afforable?

Shifting gears, homes are still affordable today! In the most recent episode of the Martini Mortgage Podcast, episode 134 called “Home Affordability Today”, that dropped this week unpacks home affordability today. Spoiler alert, homes are less affordable today than they were 12-months ago however less affordable does not mean unaffordable. Real estate today remains what some call a ground floor opportunity level.

Buying a home this spring is smart and starting or continuing your homeownership journey can pay off significantly especially you take action sooner than later.
Raleigh Mortgage Broker & Certified Mortgage Advisor, Kevin Martini

Connect with a Mortgage Strategist with the Martini Mortgage Group by calling (919) 238-4934 if you want to learn more about what you have read or if you want to talk about the options available to you any your family.