15%
(And NO, 15% isn’t just Geico’s number.)
Fifteen percent is a good rule of thumb in some key aspects of real estate investing.
1. Discount Equity
Discount equity is the difference between the market value and the purchase price of a home. The finding system Kris’ Power Team uses helps Kris and his partners secure properties with at least 15 percent equity.
Why 15%?
- Purchasing a home this way can make you more on a single purchase than some people’s annual salary. WIN!
- When you walk into equity like this it doesn’t matter what the market does. With that kind of equity already built in, it’s highly unlikely that a real estate crash would affect your investment.
This 15% equity margin is also a great safety margin for brand-new investors.
Don’t get caught up on 15% equity though. There is another goal to push for using 15%.
2. Overall ROI
While a 15 percent equity buying position is great, the ultimate goal is overall ROI. The more investing experience you have, the more exceptions you may make to the suggested 15 percent equity rule. (Kris does this frequently.)
When all five profit centers are factored in, the goal should be a 15 percent annual ROI on every property. In some cases, holding onto finding a 15% equity buying position may put up blinders for a deal that would make you 15% in overall ROI.*
So if 15% is such a big deal… just imagine what 20% would do…
As always, we wish you luck in your search for real estate success.
*Remember, we are not real estate agents or licensed investment strategists. Please consult the proper professionals and do thorough research when making investment decisions.
