The Real Deal
THE HOUSE ON RALPH AVENUE
By Esther Muller
I was a new bride in 1968 when my husband
and I used our wedding money to put a 10 percent down payment on a $59,000
three-family house on Ralph Avenue in Brooklyn. We rented out the prime
apartments and lived in the basement. We were able to live in our home
for free because the rental income covered the mortgage. Every dime
in those days counted. I was the primary wage-earner since my husband
was a full-time graduate student.
As real estate professionals, we all know an income-producing property is one of the smartest ways to generate additional revenue. Yet, for some reason, too few of my fellow brokers take advantage of this sure-fire investment. Even as a newlywed with little money, I knew that I was investing in my family’s future by building equity as soon as I could with what I had.
So, for those of you contemplating
investing in real estate, I say: Stop
If you decided to go it alone as an investor, you assume all the risks but you also enjoy all the benefits. Starting small is an easy way to begin. Consider buying a single family house or studio apartment. The income from that property can be immediately banked or, better yet, used to purchase a larger property that will produce even more income. Form a corporation to protect yourself – this move will shield your personal assets against any claims.
You may wish to share the risk by forming a general partnership with like-minded investors. You’ll have access to larger amounts of capital in a partnership and, therefore, a wider pool of property to consider. But don’t throw caution to the wind. In a partnership, you may be held personally responsible for the company’s debts. And I strongly recommend having an ironclad contract even if the agreement is with friends, family or trusted business associates. This will protect your interests against future disagreements or if the professional relationship needs to be dissolved.
Limited liability companies (LLC) are an increasingly popular corporate form. LLCs have the benefits of both corporations and partnerships without many of the drawbacks associated with those forms. There are some limitations regarding the types of businesses you can create as an LLC.
One of the more common real estate
investment devices is the Internal Revenue Code (IRC) 1031 Exchange.
It allows an investor to buy property
While looking into and pursuing these
options takes some work, bear in
An income-producing property is an investment that keeps giving and giving – to you. The house on Ralph Avenue helped to launch my husband into a rewarding career in business. I started several successful real estate companies and have accrued a number of income-producing properties. And while my husband and I eventually went our separate ways, we have nothing but fond memories and gratitude for the road that simple structure put us on.
Ms. Muller is the master teacher
at the Real Estate Academy.