Profile Tom and Susan are in their late 40s , with a 12-year-old child. They are both research analysts. Their net worth outside their resident was $300,000 in a non-qualified stock account and $500,000 in a retirement account, and an investment property in San Francisco that was valued at $1.5 million. The rents on the property were $5,800 per month with a $2,000 per month positive cash flow. Their outlook on life is consistent with a work hard/play hard profile.
Investment Goals
Tom and Susan would like to retire within the next 5-8 years, and wanted improved monthly cash flow so that Susan could cut back on work and have more time to spend with the child, who is approaching teen years. They were also looking for appreciation to support their retirement goals.
SIFF Analysis SIFF’s financial profile for Tom and Susan determined that they were conservative investors with low risk tolerance and low cash flow sensitivity.
Solution
SIFF recommended a tax-free exchange to out-of-state property. Moving from a single family dwelling to three duplexes and 1 5-plex,improved cash flow by 61% to $9,350 per month and decreased vacancy risk. SIFF identified a still-appreciating market that is allowing their equity to grow as well. Overall they have targeted a 9-12% ROI in the next 5-8 years as their investment goal.
“Investment property is the right fit for my financial goals and I would not have known how to make intelligent purchases without SIFF’s guidance. I highly recommend them and would be happy to speak with anyone who is interested in using their services.”
-- Mark R., finance manager, San Francisco, CA
The smart alternative to investing on your own.
We offer full-service real estate investment advice. From developing an investment plan to finding property, hiring property managers, and on-going evaluation of your real estate investment portfolio. Our strategy is to look for markets with the following characteristics:
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Diversified and healthy local economy;
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Steady, not astronomical, real estate appreciation;
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A healthy gross rent-to-value ratio, so that clients can realize an attractive after-tax cash flow;
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Reasonable supply of target multi-unit properties.
We typically recommend purchasing properties in the 2-4 unit range for the best combination of appreciation and cash flow, although single family properties or larger apartment complexes will make sense for achieving client objectives.
