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Best Stock To Invest In Is BRK.B

Warren Buffett is an American investor, business tycoon, philanthropist, and the Chairman & CEO of Berkshire Hathaway. Photo credit: https://www.marketwatch.com/story/this-mutual-fund-may-have-cracked-the-buffett-code-berkshire-hathaways-secret-sauce-2020-09-21

Updated December 16, 2024. My years of research tell me time and time again that the best stock to invest in is BRK.B by Berkshire Hathaway. The company is known for its control and leadership by Warren Buffett, who serves as chairman and chief executive. Berkshire Hathaway is a publically traded entity and is an overwhelmingly American multinational conglomerate holding company that is based in Ohama, Nebraska. This is a publicly traded stock under the tickers Berkshire Hathaway A or Berkshire Hathaway B (BRK.B).

The main difference between Berkshire Hathaway Class A and Class B shares is their price. The Berk B shares are much more affordable and offer the benefit of flexibility. Subsequently, if an investor owns just one share of Class A and is in need of some cash, the only option is to sell that single share, even if its price far exceeds the amount of capital he needs to access.

In contrast, a holder of Class B shares can liquate part of his or her Berkshire Hathaway holdings just up to the amount needed to meet cash flow cash flow requirements. In addition, Class B also provides a potential tax benfit. Its much lower price means that BRK.B stock can be passed to heirs without triggering the gift tax as passing Class A shares does.

One final difference is that Class A shares can be converted into an equivalent amount of Class B shares any time a Class A shareholder wishes to do so. The conversion privilege does not exist in reverse. Moreover, Class B shareholders can only convert their holdings to Class A by selling their Class B shares and then buying the equivalent in Class A.

Warnings Of Possible Financial Crisis Emerging

Many people are wondering what is happening with the U.S. and global markets. In a wide-ranging conversation, I recently watched a video where you were interviewed by Charlie Rose in April 2022. In the beginning of the interview you explained that after reading The Intelligent Investor, you understood to buy businesses that are publicly traded. You became an owner of the business and you did not care whether a stock went up or down the next day, or next week, or next month, or next year because you understood the principal of value investing. You didn’t care because you knew businesses. Looking at the numbers of the businesses that you completely understood made you comfortable enough to invest in these companies.

As Warren has said, he is an extremely bright man who is terribly interested in the work that he does. He has spent a lifetime doing it and he have surrounded himself with people who bring out the best in him. Warren has said many times that he doesn’t have to be a genius in what he does and that’s the great thing about it.

From my perspective, the genius is that Warren Buffett realized, many years ago, is that he is in a game that allows him to succeed over time to the highest of levels because he didn’t really need extra intelligence. He has dedicated himself and his eventual success by focusing on one thing: investments.

Warren said it best himself: you need the right orientation where the investor would think about what the companies are going to be worth 10 or 20 years from now. What I like best is that if a person truly internalizes everything, all the necessary ingredients, they too will make a lot of money. Warren Buffett has said, “I got rich when I understood this.”

The Gem: Berkshire Hathaway Stock

Berkshire Hathaway (BRK.B) is an American multinational conglomerate holding company headquartered in Omaha, Nebraska and is owned by Warren Buffett. As probably everyone knows, Warren Buffett is one of the most successful investors of all time. As well, my years of reading and research tell me over and above that BRK.B that the best stock to invest in.

Similarly, BRK.B is a stock that combines the best value in publicly traded companies as well as privately owning a number of companies themselves. Investing in Berkshire Hathaway provides investors with property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing, and services.

Berkshire Loves Collecting Dividends

Berkshire Hathaway famously doesn’t pay dividends. Nevertheless, Berkshire stock loves collecting them. In 2018 alone, Berkshire took in $3.8 billion in dividends. “A sum that will increase in 2019,” Buffett said in the annual letter.

As of August 2020, Berkshire Class B stock is the seventh-largest component of the S&P 500 Index. On January 10, 2018, Berkshire Hathaway appointed Ajit Jain and Greg Abel to Vice-Chairman roles. Abel is vice chairman for non-insurance business operations, and Jain is vice chairman of insurance-operations. In addition, for the fiscal year 2019, Berkshire Hathaway reported earnings of US$81.4 billion, with an annual revenue of US$254.6 billion, an increase of 2.7% over the previous fiscal cycle.

Berkshire Hathaway Is Undervalued By 20%

The Berkshire Hathaway current valuation is $495 billion. If Berkshire Hathaway businesses are valued at 20 times operating earnings approximating the S&P 500 Index, then they would have an enterprise value of $480 billion.

In comparison, subtracting the float of $130 billion would then result in an equity value of $350 billion. Then adding $350 billion (businesses) to $385 billion (stock portfolio plus cash) results in an overall equity valuation of $715 billion. As such, the Berkshire Hathaway current valuation of $495 billion represents a 30% discount!

Berkshire Has Top Management

Berkshire Hathaway is a stock that is run by top management. Consequently, the huge advantage is that the management regularly optimizes the companies Berkshire Hathaway invests in so that you don’t have to. Basically, you can sleep well every night knowing that your investment is secure.

When Warren Buffett speaks, Wall Street and investors listen intently. That’s because Berkshire Hathaway has a track record few other money managers can match. Over the last 55 calendar years, Berkshire Hathaway’s stock rose at more than 20.3% annualized pace, versus 11.8% for the S&P 500. More than 20% annually for 55 years! In my opinion, this is one of the best investments of a lifetime. The best stock to invest in is BRK.B. I ask you to research Berkshire Hathaway, if you haven’t already, and add your comments below.

*Berkshire Stock With A 18.6% Annualized Return Since 1965 Versus S&P 500 With A 11.8% Annualized Return. Photo credit: https://svencarlin.com/berkshire-vs-sp-500/*

Berkshire Hathaway Publicly Traded Portfolio

Below are the publicly-traded U.S. stocks owned by Warren Buffett’s holding company Berkshire Hathaway, as reported to the Securities and Exchange Commission in filings made available to the public. There are times when Berkshire asks for, and receives, the SEC’s permission to temporarily withhold data on some stock holdings.

Update March 2020. With the Covid-19 pandemic creating uncertainty around the world, it is unsurprising that many may have seen their top stocks underperform the benchmark indexes. Investing legend Warren Buffett is no exception. Indeed, it is reassuring that Berkshire Hathaway has managed to find value in this volatile environment.

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Many investors regularly look at investor Warren Buffett’s top holdings to see what they are and then to do their on research and decide if they like the value of these stocks. Berkshire Hathaway current top holdings by size are Bank of America, Apple, Coca-Cola, Kraft Heinz, American Express, Verizon, U.S. Bancorp, and General Motors.

Warren Buffett’s investment strategy is to build a portfolio of blue-chip companies with strong balance sheets, and then to hold this stock in BRK.B and invest with the right orientation over a long time frame. Apple is Berkshire Hathaway’s largest portfolio holding, comprising 49.1% of the portfolio. In addition, Buffett has held shares of Coca-Cola since the late 1980s; the company accounts for about 8.6% of Berkshire Hathaway’s portfolio. Furthermore, in 2011, Buffett began investing in Bank of America when Berkshire Hathaway purchased in a private offering 50,000 shares of the company’s preferred stock at a liquidation value of $100,000 per share.

Despite his unparalleled success, Buffett’s investment model has always been transparent, straightforward, and consistent. Fundamentally, he invests in fairly-priced, high-dividend paying blue-chip companies that feature strong balance sheets. Buffett buys such stocks with the intent to hang onto them over the long haul.

Listed below are the public and private businesses that add up to the best stock to invest in, which, in my opinion, is BRK.B.

Publicly Traded FIRMS Thru March 31, 2020

Company’s A Through L

Amazon (AMZN) Holdings: 537,300 shares; Value: $1.3 billion
Apple (AAPL) Holdings: 250.9 million shares; Value: $76.2 billion
American Express Co. (AXP) Holdings: 151.6 million shares; Value: $13.2 billion
Axalta Coating Systems (AXTA) Holdings: 24.3 million shares; Value: $460 million
Bank of America Corp. (BAC) Holdings: 947.8 million shares; Value: $21.7 billion
Bank of New York Mellon Corp. (BK) Holdings: 88.13 million shares; Value: $3.1 billion
Biogen (BIIB) Holdings: 648,447 shares; Value: $250 million
Charter Communications (CHTR) Holdings: 5.4 million shares; Value: $2.8 billion
Coca-Cola Co. (KO) Holdings: 400 million shares; Value: $18.4 billion
Costco Wholesale Corp. (COST) Holdings: (COST) 4.3 million shares; Value: $1.3 billion
DaVita (DVA) Holdings: 38.1 million shares; Value: $3.1 billion
General Motors Co. (GM) Holdings: 75 million shares; Value: $1.8 billion
Globe Life (GL) Holdings: 6.3 million shares; Value: $484 million
Johnson & Johnson (JNJ) Holdings: 327,100 shares; Value: $48.7 million
JPMorgan Chase & Co. (JPM) Holdings: 60.1 million shares; Value: $5.6 billion
Kraft Heinz Co. (KHC) Holdings: 325.6 million shares; value $9.6 billion
Kroger (KR) 18.9 million shares; Value: $628 million
Liberty Global (LBTYA, LBTYK) Holdings: 19.8 million shares of LBTYA, 7.3 million shares of LBTYK; Combined value $586 million
Liberty Latin America (LILA, LILAK) Holdings: 2.7 million shares of LILA, 1.3 million shares of LILAK; Combined value: $39.4 million
Liberty Sirius XM Group (LSXMK, LSXMA) Holdings: 31.1 million shares of LSXMK, 14.9 million shares of LSXMA; Combined value $1.5 billion

COMPANY’S M THrough W

Mastercard (MA) Holdings: 4.9 million shares; Value: $1.4 billion
Moody’s Corp. (MCO) Holdings: 24.7 million shares; Value: $6.2 billion
Mondelez International (MDLZ) Holdings: 578,000 shares; Value: $29.2 million
M&T Bank Corp. (MTB) Holdings: 5.4 million shares; Value: $560 million
Occidental Petroleum (OXY) Holdings: 36.2 million shares; Value: $526 million
Procter & Gamble Co. (PG) Holdings: 315,400 shares; Value: $36.5 million
PNC Financial Services Group (PNC) Holdings: 9.8 million shares; Value: $1 billion
Phillips 66 (PSX) Holdings: 227,436 shares; Value: $17.2 million
Restaurant Brands International (QSR) Holdings: 8.4 million shares; Value: $432 million
RH – Restoration Hardware (RH) Holdings: 1.7 million shares; Value: $268 million
Sirius XM Holdings (SIRI) Holdings: 136.3 million shares; Value: $775 million
StoneCo (STNE) Holdings: 14.2 million shares; Value: $396 million
Store Capital Corp. (STOR) Holdings: 18.6 million shares; Value: $372 million
Suncor Energy (SU) Holdings: 15 million shares; Value: $256 million
Synchrony Financial (SYF) Holdings: 20.8 million shares; Value: $383 million
Teva Pharmaceutical Industries (TEVA) Holdings: 43.2 million shares; Value: $498 million
Traveler’s Companies (TRV) Holdings: 312,379 shares; Value: $30 million
United Parcel Service (UPS) Holdings: 59,400 shares; Value: $5.6 million
U.S. Bancorp (USB) Holdings: 150.1 million shares; Value: $5.2 billion
Visa (V) Holdings: 10.6 million shares; Value: $2 billion
Verisign (VRSN) Holdings: 13 million shares; Value: $2.8 billion
Wells Fargo & Co. (WFC) Holdings: 345.7 million shares; Value: $8.8 billion

Berkshire Hathaway Privately Owned Companies

GEICO, Gen Re, NRG, Berkshire Hathaway Assurance
Utilities and Energy Group:
Berkshire Hathaway Energy and Northern Powergrid
Manufacturing, Service and Retailing:
Recreational vehicles: Forest River Inc.
Clothing: Union Underwear Corp., Fruit of the Loom, Garan, Fechheimer Brothers, Russell Corporation, H.H. Brown Shoe Group, Acme Boots, Brooks Sports, Justin Brands, Chippewa, Justin Boots, Justin Original Workboots, Nocona Boots, and Tony Lama Boots
Building Products:
Acme Building Brands, Benjamin Moore & Co., Johns Manville, MiTek Inc., Shaw Industries, Inc., Clayton Homes Inc.
Flight Services:
FlightSafety International Inc., and NetJets Inc.
Retail:
Nebraska Furniture Mart, RC Willey Home Furnishings, Star Furniture Company, Jordan’s Furniture, Inc, CORT Business Services, Ben Bridge Jeweler, Helzberg Diamonds, The Pampered Chief, Ltd., See’s Candies, Dairy Queen, Orange Julius, Karmelkorn, Oriental Trading Company, and Pilot Flying J
Media:
Buffalo Evening News, Buffalo Courier-Express, Business Wire, Omaha World-Herald, Richmond Times-Dispatch, Winston-Salem Journal, The Eagle, Waco Tribune-Herald, Tulsa World, Greensboro, North Carolina-based News & Record, Virginia’s Roanoke Times, Press of Atlantic City, and ABC affiliate WPLG
Real Estate:
Berkshire Hathaway’s Energy’s HomeServices of America, Home Capital Group Inc., Store Capital, and Clayton Group
Other Non-insurance:
From 1986 to 2003: Albecca Inc., CTB International Corp., McLane Company, Scott Fetzer Companies including: Kirby Home Cleaning Systems, Wayne Water Systems, Ginsu Knives, and World Book Encyclopedia.
In 2007: acquired TTI, Inc, and Marmon Group
In 2014: Berkshire Hathaway Automotive created through the acquisition of Van Tuyl Group; acquired Duracell from Procter & Gamble in an all-stock deal.

Finance and Financial Products

Clayton Homes

Investments

Russell Corporation including Spalding NBA Official Basketballs, and BIKE Athletic Company
Lubrizol Corporation
Preferred stock in Wrigley
Goldman Sachs
GE
Burlington Northern Santa Fe Corporation
Indian insurance BerkshireInsurance.com
H.J. Heinz Co.
Berkshire owns 1.74 million shares of Gannett, and Precision Castparts Corp.
2020: Berkshire added a position in the Q2 2020 of 20 million shares in mining company Barrick Gold
2020: Q3 2020 agreed to buy Dominion Energy’s natural gas transmission and storage operations.
Between September 2019 and August 2020, Berkshire purchased more than 5% of the outstanding stock of each of the five largest Japanese general trading companies: Itochu, Mitsubishi, Mitsui Sumitomo, and Marubeni.

The Rich Didn’t Get Wealthy By Investing In Stocks

Have you ever wondered how the wealthiest investors in the world became wealthy? For example, if you look at Warren Buffett you might think that the wealthiest investors in the world enjoyed their success due to wise investing decisions.

However, despite the fact that the best stock to invest in is BRK.B, the reality is that Warren Buffett is a rare exception. Buffett’s investment returns over the decades have been nothing short of phenomenal. His investments over the years are the reason for his success. While replicating his success might not be possible, you can emulate his strategies to become a successful investor.

One of the primary reasons for Buffett’s success has been his ability to recognize the deeper value behind a company. The best stock to invest in is BRK.B, but understand that Warren Buffett invests in businesses that he understands and knows that the inherent value of the business is more than its evaluation at the time of investing. As a result, all the work that Warren Buffett and his team of people do will add up to the best stock to invest in, which is BRK.B.

Create A Product Or Service To Add Value

Contrary to popular belief, the wealthiest investors did not use stock market investing to find the best stock to invest in such as BRK.B in order to maintain the wealth they had already acquired. Almost all of them made their wealth by starting companies that were very successful or some have received an inheritance.

I invite you to read my FinancialGoodness.com: About The Writer and scroll down to “Think of Knowledge As A Tree.” One of the entrepreneur’s I have studied is Ryan Daniel Moran.This entrepreneur realized that you have to strategically position yourself to create value in service to other people. Please read my blog on how to Build Unlimited Wealth With Money’s Untold Truth. To summarize this article, find the biggest problem you can think of and then solve that problem. You have to create a product or a service that people really want and then think of a way to deliver it to them. This is the secret for creating unlimited wealth.

Imitate Strategies Of Successful Investors

Once your business is profitable, you can then use some revenue to maintain your wealth that you have acquired over the years. You can then imitate the strategies of successful investors. In this way you can use your wealth by investing in wise investment moves in the stock market. The combination of these two strategies, of having a profitable business and then investing in the markets, is really the best way to maintain and to increase your wealth over time.

Consequently, have you ever thought about the relationship between money and wealth? Specifically the fact that money is just paper with a number on it. Nevertheless, people have equated money to value.

In the end, perhaps this was never about the money. Let’s face it, it was all about the freedom that you were looking for. Accordingly, if you make wise investments you will have the ability to do whatever you want, whenever you want. Thus I am talking about your choice of freedom.

This is the dream of freedom that you were seeking all along. Truly I challenge you to do it and have the courage, the belief, and the strength to make this your reality! When you do this, you will have completely conquered how to build unlimited wealth with money’s untold truth because now you know the secret to having a lifestyle of richness.

Conclusion

I hope you enjoyed my research on the best investment to make. If a stock market crash happens again or a big dip occurs, the long-term buy and hold value stock is apparent to me. My years of research tell me again and again that the best stock to invest in is BRK.B.

To conclude, I like the peace of mind that the BRK.B stock has with it. In the same way, I can invest in BRK.B and rest good every single night. In the final analysis, I know that the leading management at Berkshire Hathaway will look after my investment and make sure it grows slowly over time for years to come.

“An investment in knowledge always pays the best interest.”

– Benjamin Franklin

Matthew 7:8 NLT. For everyone who asks, receives. Everyone who seeks, finds. And everyone who knocks, the door will be opened.

Last Updated on December 16, 2024 by Financial Goodness

Financial Goodness

George Alexander Roy III and our team are experts in helping you to seek wealth through investing and tips on how to succeed. Join us at FinancialGoodness.com to increase your knowledge and skills through education in the areas of personal finance; real estate; investments; digital marketing; comparison of the best states to form LLC’s and comporations; and the best AI app for increasing your fluency in English.

George has been an owner of a residential real estate investment business that focuses on wholesaling, fix & flip, and long-term buy-and-hold property strategies with a consistent increase of annual revenues. Undoubtedly, the tax laws in the United States and Colombia, South America offer some very favorable tax incentives for owning real estate.

Consequently, as an entrepreneur, researcher, writer, and speaker I have sought the truth in everything I do, no matter how difficult. Hopefully this value and service will help each person achieve their financial freedom sooner.

Everyone Can Buy And Own Property In Colombia

Buy Colombia Property. Photo of Medellin. Photo credit: Unsplash.
Thank you to Daniel Vargas.

Updated December 16, 2024. Everyone can buy and own property in Colombia, South America. If you are looking to invest in property in Latin America, especially if you are from another country, Colombia, South America, should be high on your list of destination choices. The Colombian people are friendly and they welcome foreigner people to Colombia. The climate is also very welcoming, with a variety of landscapes that will meet the needs of many buyers. As well, Colombia has one of the strongest performing economies. In addition, the price points for the real estate properties are particularly affordable in this Latin American region.

Consider Buying A Property Overseas

There are benefits that you might want to consider for buying real estate overseas. Andrew Henderson, from the YouTube blog Nomad Capitalist, emphasizes that people from the United States, Canada or Australia might want to sell their property in these countries and invest in overseas properties. Check out Andrew’s YouTube video called the Benefits of International Real Estate Ownership.

Andrew points out that the problem with investing in the U.S., Canada and Australia are that the property returns are low and the taxes are high. For example, in Australia the returns on rental properties are like 1 to 2% only! If you consider buying a property in another country many times the returns are much higher and you can have a friend run the property management for your off shore properties. But, not in Colombia, South America. The attractive reality is that everyone can buy and own property in Colombia!

Colombia Has Very Nice Rental Returns

Let’s take a look at the Colombian property rental revenues. If you buy a residential apartment to rent in Colombia, I would say you are looking at a minimum of a 12% average return. Then add in the increasing value of the real estate of 10% on average for the last three years. Not too bad, right! I first came to Colombia in 2005. I have watched every year as the economy and housing prices haven’t gone down, they just continue to increase. For this reason, the housing market in Colombia, South America is one of the best kept secrets in the world!

Looking For Global Asset Protection?

Another reason that people look at global real estate is the idea of asset protection. This is kind of like a form of government insurance. You can protect yourself not only on an asset basis, but you can protect yourself from some of the madness that’s going on around the world today because everyone can buy and own property in Colombia. To me, that is a win.

In addition, if you are a U.S. citizen or some other countries citizen that has foreign tax rules, this is one of the few ways that you can legally have a non reportable asset. For example, if you are a U.S. citizen and want to buy a house or some land overseas in another country you can do it. You can wire the money overseas and pay in cash.

There is not an IRS form on which you need to report. There is an FBAR, or an FATCA to report a lot of assets. But not for foreign real estate or in the precious metal of gold. This is fantastic, because in the U.S. you have to pay taxes on the income from any property. But if you want to park money in foreign real estate and enjoy the appreciation you can do it with relative safety and it is non-reportable.

Be Well Diversified In Your Investments

The last reason why you might want to consider buying foreign real estate is because doing so is part of being well diversified in your investments. Perhaps you have always dreamed of having a second home or vacation home in another country that you could go to spend part of your time. In Colombia, it is possible that you could get a residence permit by owning property here.

It is also possible that if you spend some time here in Colombia it can lead to a residency permit. Depending on the size of your Colombian investment, you can apply for a one-year or five-year visa. There is also the possibility that you can become a citizen as well. This citizenship gives you other opportunities as well. To give you an example, your Colombian real estate is also a safe and secluded place to go if you are worried about chaos in the world.

The Legal Process Of Buying Property In Colombia

If you are a foreigner, you can in fact buy property in Colombia. The Colombian government recognizes the importance of foreign investment. The good news is that the procedure is the exact same process for foreign individuals as it is for locals! The only requirements are you need to have a valid passport and sufficient funds for the purchase of the real estate.

No National Licensing Systems

The real estate market operates very differently than your home country if you are from North America or many Eurpean countries. Here in Colombia, there is no national licensing system in place. This is a turn around if you are from a country like the United States or Canada where the agents are always trying to ask for and demand the exclusive rights on your property.

As a result, not having a national licensing system in Colombia has led to a proliferation of real estate agencies called inmobilarias. Many investors will be surprised to find out that it is very uncommon for sellers to have exclusive agreements with what are called inmobiliarias. This is good news if you are used to paying much higher fees for buying or selling properties. If you have been paying high fees to brokers, you are going to really like the commission rates in Colombia.

Nice Commission Rates

The standard commission for real estate agents in Colombia is just 3%. The great news: quite often the 3% fee is split 1.5% and 1.5% between the buyers and sellers agents. In short, here in Colombia, the low commissions are very nice for buyers and sellers!

Highly Negotiable Property Prices

Overall, is important to point out that here in Colombia, in Bogota and Medellin for instance, it is not uncommon for a property to be for sale for many months before a buyer is found. So, the huge advantage is: most property prices are highly negotiable.

Hide The Fact That You Are A Foreigner

Have a real estate professional do the research on the properties that interest you, how long they have been on the market, and how motivated the sellers might be. I recommend always using a local agent to negotiate the price. Hide the fact that you are a foreigner because this may cause some type of discrimination. Here is the secret: only reveal that you are actually a foreigner after the Promesa de Compraventa has been signed.

Three Necessary Tips

Everyone can buy and own property in Colombia. Here are three more tips that you need to do.

Firstly, is to open a Colombian bank account. Again I highly recommend working with real estate team because this step can be a daunting one. So get the right help from the beginning. Your real estate team will be able to help you determine certain details such as whether to buy in your name or in your company’s name.

Secondly, make sure to leave a paper trail. Buying real estate is easy to mess up, but a smooth operation when done by professionals.

Finally, hire an attorney. Having a good attorney will help with the stresses of an international real estate venture.

Legal Process To Buy Colombian Real Estate

I have found an excellent article called How To Buy Property In Colombia: The Legal Process, written by the legal team Colombia at bizlatinhub.com. Below the the steps needed so that everyone can buy and own property in Colombia.

First, find the property that you are interested in investing in. Then acquire a Certificate of Tradition and Liberty or ‘Certificado de Tradición y Libertad’. The Certificate of Tradition and Liberty contains all the information about the property and the properties history.

The properties history includes ownership records, mortgage history, legal claims on the property as well as any works carried out on the property. This property work includes when significant work to the property has taken place.

You can request the Certificate of Tradition and Liberty at the Registry Office. Requesting the Certificate of Tradition and Liberty will cost $15,700 pesos. Or if you convert Colombian pesos to dollars,about $4.60 USD. Nice price right? Welcome to the prices of Colombia!

Taxes and Fees Of Buying Property In Colombia

You want to ensure that the previous owner has paid all of the outstanding taxes on the property. You need to obtain these two certificates directly from the owner:

Tax free property certificate (Paz y Salvo Predial). This certificate guarantees that all the municipal taxes on the property have been paid.
Tax free on value gained property certificate (Paz y Salvo Valorización). This certificate guarantees that all taxes have been paid on the increase in value of the property.

Buyers Fees

At the time of purchasing the property, the buyer must pay different taxes and fees which total 1.65% of the value of the property. The 1.65% value of the property consists of:

1% tax on the property’s value for the registration of the property.
0.5 % fee of the property’s value for the registration of the property.
0.15% fee of the property’s value for the notary.

Sellers Fees

The seller of the property must pay between 3.63% and 4.79% of the total value of the property in taxes and fees:

0.15% fee of the property’s value for the notary.
3-4 % (including 19%VAT – value added tax) fee of the property’s value for the real estate agents.

Final Step For Buying Property In Colombia

The final step to buying property in Colombia is the signing of the Public Deed or ‘Escritura pública’ and this will confirm you as the new legal owner of the property. The Public Deed is a written legal instrument and you must hire a notary to produce it. The following taxes and fees apply:

Public Deed Fees

0.25% fee of the property’s value for the notary.
1% of the value of the transaction as an advance payment to be applied to the Income Tax.

Once the Public Deed is paid for and signed, it gets registered at the Registry Office and then consequently at the Cadastre or ‘Subdirección de Catastro’ where you will be officially registered as the new owner of the property.

Buy And Own Property In Colombia

There you have it. In conclusion, everyone can buy and own property in Colombia! To prepare, I would definitely recommend doing more due diligence on specific property regions and areas that you may be interested in. I would also recommend looking at property in Bogota or property in Medellin. Both of these locations have the potential for excellent returns. If you have a question or need more help, please send me a message.

Did you know that there is actually an equation for wealth? I invite you to check out my blog on how to Build Unlimited Wealth With Money’s Untold Truth and achieve your dreams and living an amazing lifetyle.

Until my next blog, best wishes!

Deuteronomy 8:18. But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth, that he may establish his covenant which he sware unto thy fathers, as it is this day.

Matthew 7:8 NLT. For everyone who asks, receives. Everyone who seeks, finds. And everyone who knocks, the door will be opened.

Last Updated on December 16, 2024 by Financial Goodness

Financial Goodness

Buy Houses Without Cash Or Credit

Updated December 16, 2024. Say that you want to buy houses, but you don’t have cash or credit. In addition to not having cash or credit, you don’t think you would qualify for a home mortgage. What is the answer? You have read books and videos about investing in real estate. Again, are there any options available to buy houses without cash or credit? The answer is yes! You can be buying houses right now using creative financing without any cash or credit.

Three Ways To Buy Houses

Here are three ways that you can buy houses without cash or credit. All you definitely need is a really motivated seller. If the seller isn’t really motivated, the answer is simple. Wait for the next deal to come up.

The three options to buying houses that we will go over in more depth are: owner financing, subject to, and lease options.

Owner Financing

Owner financing is a transaction in which the property owner finances the purchase directly with the person or entity buying the property, either in whole or in part. This type of arrangement can be advantageous for both the buy and the seller. Basically, it eliminates the costs of a mortgage from a bank. As the real estate investor, ask for $0 down payment, and an interest only payment.

If you have ever purchased a house before, you know that when the house ownership changes hands it seems everyone wants a piece of the pie, so to speak. The mortgage is part of this equation because a part of the mortgage each month always goes to pay down the principal. If you can negotiate an interest only payment with the seller, you will pay down the price of the property more quickly.

Subject To

Subject to means that the investor will offer to take over the original owners payments because the owner was falling behind. Why would anyone agree to leave their name on the loan and let you become the new owner? There is a rule in business that says “you are not your customer.” So you can’t really put yourself in the owner’s shoes. For whatever the reason, the original owner is highly motivated to get rid of their property. The good news is that luckily you are there to creatively solve the issues and problems so the owners can get on with their lives.

You agree to take over the original owners payments. Why would you do this? There are two reasons. One: time is of the essence. You don’t have time to see if you qualify for a mortgage. The owner’s want out now. The second reason: the original owners payments are less than the bank would give to an investor by a few percent points. So use the mortgage that is already in place. Basically, the bank doesn’t care where the money is coming from each month to pay the mortgage. The bank just wants the money each and every month. After you take ownership of the property, then you can start to consider if having your own mortgage makes sense for this property.

Lease Options

Lease options. The buyer investor pays the seller option money for the right to purchase the property at a later date. The buyer and the seller can agree to a purchase price at the inception of the agreement. Perhaps the buyer might agree to pay market value at the time the option is exercised. As a result, owner financing and subject to do not work.

If owner financing doesn’t work because there is already a mortgage on the property, and in addition, subject to doesn’t work because probably they owe too much based on the value of the house. If that is the situation, then a lease option could make the deal work.

Lease Option Agreement Example

The value of the house or apartment is $150,000. The loan on the property is $140,000. The investor would agree to lease the property for a period of say five years for $1000 a month with the option to purchase the property for $145,000. Then you, the investor, can rent out the property. Keep the original owner’s mortgage in place and just make payments. Check the numbers and make sure you are positive with your cash flow.

Depending on the location of the house, if the area is appreciating, in five years you could exercise your option and purchase the property. However, if the area is depreciating you may be better off deciding to not purchase the property. In this instance you can always try to renegotiate the price of the property to an agreeable value.

No Excuses For Owning Multiple Properties

So there you have it. These are three awesome ways to buy houses without cash or credit! Many real estate investor professionals use these three ways exclusively in their careers. If you are looking to invest in real estate or looking to take real estate investment to the next level, seriously consider the techniques we have just talked about.

I know real estate investors that stick to these three buying techniques and have the profits each month from hundreds of property rental houses that they control. Therefore, if are interested in finding out how they do it, please read my blog on the best three ways to Boost Your Rental Property Cash Flows.

What popular articles and blogs do you recommend?

Finally, if you are interested in Becoming A High-Net Worth Individual, please read my blog and watch the YouTube video by a fancinating guy named Andrew Hendersen, founder of Nomad Capitalist. He believes that the world has changed forever and says it’s time for you to “go where you’re treated best.”

Best wishes to you in achieving your financial freedom sooner!

Last Updated on December 16, 2024 by Financial Goodness

Financial Goodness

Boost Your Rental Property Cash Flows

ATM. Photo credit: Unsplash and johny vino.

Boost Rental Property Cash Flows

Updated December 16, 2024. Ever wondered if there was a way to get more money from your rental houses? In my opinion I believe these are the best three ways to boost your rental property cash flows into a real cash flowing machine.

There are three ways to dramatically increase the rental income for a property. Do you have rental houses that are close to colleges or universities? Do you have a vacation rental property that is close to the beach? The three kinds of rental properties that you could be making more money are student housing, vacation rentals, and my favorite: rent to own.

Let’s take a look at the 3 ways to boost your rental property cash flows into a real estate cash flowing machine.

Difficulty Finding Good Rental Tenants?

If you have or are thinking about buying other houses as rental units you can significantly increase the rent from these houses. Let me show you how. Let’s suppose that you decide to rent out a property. One of the problems is the occupant. What if the tenant decides not to pay the rent? You are getting no money on that unit. This is a huge problem because on most properties you still have taxes, insurance, maintenance, management fees, etc. On top of that many times you have a big mortgage to pay every month.

So if the tenant decides to move out you have a real financial issue on your hands. If you think about it, if the family moves out of the rental unit for one month so that it is vacant, a lot of time that will remove all the cash flow for the entire year for that property. So basically you have to have a 0% vacancy on the rental houses to make them work. But 0% vacancy is not realistic. In the real world, the reality is that some renters don’t always pay you.

Problems With Rental Cap Rates And NOI

The other problem is a lot of the time the rental houses will have a low cap rate. Say you rent out a property to a tenant for $1,200 a month. But then say you have to deduct the $100 for the taxes, $75 insurance, $100 property management fees, and $125 for maintenance. These costs total $400. So $1200 rent – $400 = $800 NOI (net operating income). In this example, after paying all the expenses you will have $800. Then multiply the $800 x 12 = $9,600 is what you receive each year for renting out this house. BUT this is assuming that you do not have a mortgage.

Determining Property Cap Rates For Rentals

To determine the cap rate you need to take the NOI of $9,600 and divide by the purchase price of the house. The typical family single home prices vary widely in the world. But let’s say that the cost for purchasing this house is $150,000. So $9,600 divided by $150,000 = 6.4 cap rate. A cap rate of 6.4 is bad. Most real estate investors look for a cap rate of 10 or above.

Blueprint To Boost Cap Rate On The Same Property

So here is the millionaire dollar question. How do we increase the cap rate above 10 on the same property? The cap rate is so bad in the example above we just looked at because the cost to purchase the house is so much more than the rental rate. Therefore in order to make this house a cash flowing machine we are going to have to get very creative.

Now let’s take this very same house and not change anything at all. We want to have a house that a person could move in and live in that home as their primary residence. Basically we still have the highest and best use of the house: a single family residence has the highest and best use.

There are three ways to boost your rental property cash flows. These three techniques will greatly improve your cash flow each time you find another house to buy. Let’s take a look at the 3 ways to boost your rental property cash flows into a real estate cash flowing machine.

3 Ways To Boost Your Rental Cash Flows

Idea #1 Student Housing

Are there universities, colleges or specialty schools in the area of the rental house? If the answer is yes, then get some more furniture and you can rent out the house by the room. The furniture for student housing can be bought very inexpensively at a second hand store and that will be fine for student housing.

Say the rental house has four bedrooms. You rent the house for $550 per room. 4 bedrooms x $550 = $2,200. Not bad right? $1,200 to a family or $2,200 for student housing and you market the student housing directly to the college or university.

Now usually you have to time it right because there are certain times of year that students will be looking for their housing. Once the students find their housing they are locked in for a year. You just have the parents co-sign, that way you are going to get paid no matter what. Once the students are there at the rental house, they will tell other students and the student rental house will be all set for years. This is an awesome way to turn a rental house into a cash flowing machine!

Idea #2 Vacation Rentals

Vacation rentals are the perfect way to rent your house if you are by the beach or by a beautiful place in the mountains. For most vacation rentals you are renting by the night. Let’s again use our example of the rental house with four bedrooms. This four bedroom rental house could easily rent for $4,000 a month. Compare $4,00 a month vacation rental to $1,200 a month for a normal typical family! What a huge difference between $4,000 a month versus $1,200 a month!

Remember though that there are a couple of expenses. One is furniture. This furniture needs to be a little bit more expensive. You need to be thinking about people writing positive reviews of your vacation rental. A little bit nicer furniture will positively impress the photos when people are looking online to decide which house to rent for their vacation. You may have to spend $5,000 or more on furniture depending on your location.

The other expense is utilities. Depending on the location of your vacation rental property, the utility bills could be a larger expense. Factor in air conditioning, gas, water, electricity, as well as internet and cable.

Earlier I was talking about cap rates for this four bedroom rental house. I was saying that to rent this unit to a typical family produces a cap rate of 6.4. A 6.4 cap rate is lousy. But here are the cap rates for student housing and a vacation rental.

Student Housing & Vacation Rentals Cap Rates

Student housing with purchasing second hand furniture: Double the cap rate of 6.4. Here you are looking at 10 or 12+ cap rate. Now you have a much better rental solution!

Vacation rentals with nicer furniture and possibly larger utilities: The cap rate can go to 20+. As you can see, a 20+ cap rate is awesome! But the best part is this. People come, stay, and then leave. You don’t have to worry about evictions because the people are there on their vacation! You have so much money coming from your vacation rental that you can afford some of the hassles (like little things getting broken) that will happen when people stay.

Idea #3 Rent To Own

Rent to own is a beautiful way to build nice profits in residential real estate. The big secret is this: so few people are doing this technique! People don’t know about it. The other real estate investors are concerned and there are not that many professionals that the other investors can call and ask for help. Please check out the laws of your rental properties to make sure that their are no laws against rent to own properties.

This technique is huge because for the most part student housing or vacation rentals are not an option for many cities and locations. There is no school nearby and it is not a vacation destination. So what do you do in these cases to turn the house into a cash flowing machine?

Setting Up A Rent To Own In Order To Boost Cash Flows

You have to offer the house on a rent to own rental agreement. Here is how to set up the rent to own strategy:

Get an upfront, non-refundable option payment. When the people are first moving in, they are getting a lease with you (one document), and another document which is the option to purchase the property at a specified price when they first move in (second document). To get that option they are going to pay you upfront.

How much are they going to pay you? Could be anywhere from $5,000 to $10,000 or even more. Can you believe it?! Anybody could ask for $2,000. If you are good at marketing you can get even more. A lot of people have mattress money (more than you think). They have this money, especially around tax return time when they are getting a tax refund. Around the month of April in the US is a huge time of year for the rent to own strategy.

Move All Maintenance To Tenants & New Owners

Push all maintenance to the tenants. As a result, there is no more maintenance. They are becoming the owner of the property. If something bad happens, that is all them. For this reason, you can push all maintenance off to the new owners. Important: there are certain tenant and landlord laws that will supercede this. For example, even though the tenants signed an agreement saying that they will maintain the property, if the HVAC goes out, the owner might have to fix it.

So be wise and check and see what the laws in your area look like. But for the most part, this will save you $125 in maintenance that we were talking about previously in the four bedroom rental house example. This is awesome because now the tenants are handling the maintenance!

Higher rental amount. Usually the tenants want to pay less rent for the house. Normally. But here you can do rent credits. Check with your location to see if this is allowed. Rent credits allow you to raise the rental rate. Say rent is normally $1,200 a month. You bump that up to $1,400 a month. Then you give the tenants a credit of $300 a month. The tenants can use the $300 credits to reduce the price of the house when they are going to purchase.

Big Secret About Rent To Own Properties

Here is the big secret to rent to own properties. Ready? Over 90% of the people who do a rent to own will NEVER EVER exercise their option to purchase. They are NOT going to buy the property in almost all cases. So relax and do not worry. The probability is that no one will buy your rental home.

Now if you keep renting the rental house out, the probability will increase that someone will eventually buy your rental house. But if you keep doing the rent to own strategy, the rental house profits should make you very happy. If one out of ten buys your property, it’s ok. Just go and buy another property. It is a win-win situation.

What I love is this. With the rent to own houses I get the money up front. What if there is a problem and you have to evict the tenants? If that’s the case you already have money up front to do it. As well, what if you have to replace the interior of the house with new carpet and paint? Again you have the money to do these renovations as well. Whatever happens, with the upfront money you already have, you are covered!

I often get the question: why do people do the rent to own and then change their mind? The reason is because these people typically don’t have a better financial situation tomorrow than they do today. Typically these people are just not trying to better and improve their lives like you.

Advertise Your Rental Property

The rent to own is so exciting because so few people are doing it! If you put up a signs around town that say:

With this sign you will get hundreds of phone calls. You will have to get up a different phone to handle taking the messages you will receive. The phone will ring off the hook. This Rent To Own sign will work in urban or rural areas. It really doesn’t matter. Why? Because there is a huge population of people who want the OPPORTUNITY to rent to own their own home and almost no one offers it!

Examples Of How To Make The Phone Ring

So when you do it and the phone starts ringing you will find out that the majority of the people have some problems. Examples? No jobs, and no money to put down. Get a voicemail message machine. I say in the message on the answering machine that I am looking for people who have $5,000 dollars to put down and $3,000 dollars earnings a month. Please leave your information. You are going to have to filter the people because you will get hundreds of calls. Believe me, you will not have an issue with potential people to screen when looking for the right tenant.

Improve Your Cash Flow Today

There are three ways to boost your rental property cash flows. The best three rental properties are student housing, vacation rentals, and my favorite: rent to own. These three techniques will greatly improve your cash flow each time you find another house to buy. These strategies are the foundation of any creative real estate investor, and in my opinion, these strategies will build you wealth as a real estate entrepreneur.

What popular articles and blogs do you recommend?

If you are interested in finding out the secret to buying houses when you don’t have the necessary cash, please read my blog: Buy Houses Without Cash Or Credit to get you on the right path for creating wealth.

If you are interested in Becoming A High-Net Worth Individual, please read my blog and watch the YouTube video by a fancinating guy named Andrew Hendersen, founder of Nomad Capitalist. He believes that the world has changed forever and says it’s time for you to “go where you’re treated best.”

Best wishes! Until then, watch for my next blog….

Last Updated on December 16, 2024 by Financial Goodness

Financial Goodness