by Mike DelPrete

They are both great investments, but at certain times and market conditions, you may

decide to use either of these tools. You may want to use both of them simultaneously.

Having financial education and knowing how to use every investment tool to your

advantage is key.

Don’t Miss Two Upcoming Core Skills Workshops with the Author…

Saturday, September 21st | Creative Deal Structures Simplified with Michael Del Prete
(Click Here to Register or Details)

Wednesday, October 2nd | Raising Private Money with Michael Del Prete
(Click Here to Register or Details)


While any kind of investment would involve a certain amount of risk, investment in both

real estate and the stock market is comparatively safer if the investor does his part of

due diligence. Although some may find themselves exceptionally lucky investing in

stocks, it is generally seen that investment in real estate is a more lucrative and safer

bet to make. Due to its tangible nature, you can drive by your property and be rest

assured that whatever you invested has come back to you in the form of brick and

mortar structure and is not floating somewhere in the virtual world of stocks, which is

controlled by so many external factors.


A shareholder of a company has no control over his investment. You never know what

happens behind closed doors. Just try to remember the corporate disasters that

happened in the last decade. With real estate, you have full control over the happenings

of your business. For example, if the bills are too high at your property, you can identify

the problem and take on measures to reduce costs and improve your investment. With

stocks, there is not much you can do if your shares drop in value. You can buy more, or

you can sell more.


We think real estate is the best investment you could make. As Robert Kiyosaki says,

“Real estate investing has created more millionaires than any other form of investing

because of its many advantages. Whether you’re investing for cash flow or capital

gains, your success is dependent on your education.” There are many more reasons

why real estate is great and there are a total of 5 “IDEAL” reasons we would like to


I ncome , D epreciation , E quity , A ppreciation , L everage


1) Income – Cashflow

Investing in real estate offers cash flow. Let’s review the income benefits of real estate.

Income maybe the most important piece, especially to a buy and hold investor

(Landlord). If you buy right, this will lead you to positive cash flow, financial freedom,

and early retirement.


If you have invested in real estate, then you can make money through several different

avenues, with the most common being rent. While it is possible that you can earn

income from the installation of a cell tower or Billboards, the vast majority of income

from residential property comes in the form of rent. Tenants pay a fixed amount each

month – and that will increase with inflation and demand. After deducting expenses and

depreciation, your income is nearly tax-free.


The best way to determine your cashflow is to understand how to calculate it.

Gross Rent – Expenses = NOI (Net Operating Income) this is your net cashflow if there

is no loan in place. If there is a mortgage in place you would deduct your loan payment

also known as Debt Service (DS) from the NOI and this will give you your cashflow



2) Depreciation – Its not how much you can make but how much can you keep

The IRS allows depreciation deductions. These tax deductions can’t all be taken at

once, so that’s where depreciation comes in. This depreciation can be claimed as a

loss on your taxes although you really didn’t lose anything. For residential rental

property, the building may be depreciated over 27.5 years. For commercial property, it

is depreciated over 39 years.


So you may be wondering how does this work? For example, let’s say the cost of the

property is $150,000. The IRS will consider about 20% of the purchase price as land

value which would give the building a value of $120,000. Now, Take $120,000 and

divide by 27.5 years this will give you $4,363 a year in depreciation or LOSS. Think

about it; you really didn’t lose anything. Let’s say your rental property generated $2,500

in profit or NOI. Your $4,363 deduction would make your $2,500 profit tax-free income.

After you deduct your profit from your deduction, you would still have $1,863 of losses

to apply towards other income you have generated.


When financing a property, the interest paid on the mortgage is also a deductible

expense for an owner. Few of the more common interests that homeowners can deduct

from their overall income include interest paid on loans used to acquire or improve the

property, interest on credit cards used for the payment of goods and services used in

the rental property. The cost of the repair (if repairs are necessary and reasonable in

amount) can be deducted from the income of the year in which they happened. Good

examples of deductible repairs include repairing gutters or floors, repainting, plastering,

fixing leaks, and replacing broken windows.


Please do not use this advice without speaking to a professional CPA. As you know,

taxes are very complicated. Talk with your CPA and have a discussion on Depreciation

for your rental property, and how it applies to your specific situation.


3) Equity – Build it up

Equity can be built when using financing to purchase an investment property. Most

mortgages are amortized to reduce the loan balance over time. Every time your tenant

pays you rent, you apply it towards your mortgage. As your mortgage balance

decreases every month, you are building up your equity.


Another benefit of your equity increase is how you can pull some equity back out of your

property in the form of a home equity loan. This extra cash might make sense if you

would like to purchase more investment properties. This should never be used to buy

vacations, cars, and as Robert Kiyosaki would say doodads! Also use caution before

borrowing more money. Plan to have some savings for vacancies, repairs etc. Consider

your new interest rate and make sure your property will still provide cashflow.


4) Appreciation – Icing on the Cake

One of the most significant ways of making money in real estate is through

appreciation. Therefore, its understanding is crucial. Appreciation is the stock market

function of the real estate investing business. When you invest, Appreciation is the icing

on the cake. Since we’ve discussed three other benefits of real estate investing, you

know by now that we could still build wealth even if we ignored appreciation. However,

we don’t recommend purchasing an investment solely on appreciation. When the

property is likely to show an appreciation, people prefer to buy in that area rather than



Why properties appreciate?

The reason why the land appreciates is simple. It is available in limited quantities, and it

cannot be manufactured. Demand for land is growing steadily as the population grows,

and since its supply is limited, the price should increase with time. Unless something

happens to restrict the demand or render the land of a particular area unusable, you can

expect the value of it to increase over time. An average annual pace of 3.7 percent

appreciation for the next five years was predicted. Of course, this varies by state, city,

and even neighborhood, so be sure to do research in your town.

Why is it easy to benefit from appreciation in real estate?


It is often possible to buy a property below the market rate. Some real estate

professionals manage to get houses 40-60% below market value. They buy houses

from people that want to sell quickly due to major repairs or distress in one’s life. Yes,

one can buy undervalued stocks but that is not the same as buying below the market

rate. Market value is the money for which your house can be sold today. Undervalued

stock is the stock that the market has not assessed properly, and which is likely to grow

in the future.


5) Leverage – How regular people lift boulders

Leverage: The use of various financial instruments or borrowed capital, to increase the

potential return of an investment.

Leverage makes it possible for real estate investors to accelerate financial growth and

make more money, making real estate investments more lucrative than stocks. If you

want to buy a stock, you must pay the full value of the shares at the time of ordering.

Even if you buy on margin, the amount you can borrow is still much lower than the real

estate sector.


Most mortgages require anywhere from 0% – 20% down payment (varies depending on

loan type and lender) of the total value of the asset. This means that you can control all

assets and the capital held by paying a fraction of the total. Real estate is one of the few

investments where you can have 100% control of an investment with only 20% or less

equity ownership! Sure, with lending you are indebted to the bank but you won’t see the

bank coming by to tell you how to manage your real estate investment!

Unlike stocks, real estate is an asset you can control …that’s why we love it. The ability

to control your investment is what makes real estate so appealing. So, put this IDEAL

Investing tip to work. There is never a better time than the present to start investing. If

you don’t start now, you may never end up doing so.

We don’t need to be convinced about the benefits of real estate, but how about you?


Until next time…

Michael Del Prete

Kevin's Story

“The Launch Pad was exactly what I was hoping for. The deep dive into my expectations through your assessments was very valuable. The plan you provided me for my investment future put me at ease and gave me some reassurances that I am heading in the right direction. Launch Pad is definitely something I would recommend to all new investors. Thank you!”

You have Successfully Subscribed!

Matt & Nicole's Story

“My wife Nicole and I wanted to thank you for the 4 hours of dedicated time you set aside for us. The Launch Pad program really helped us find out what our interests were, and you experience and guidance helped us figure out how to go about achieving our goals! We always thought the recommendation you gave us was unachievable, but after our meeting we realize that it is!

The Launch Pad program was extremely insightful, and we thank you for your input and explanations! Also, we look forward to all the subgroups you recommended we attend.

Thanks again! I highly recommend the Launch Pad to any new investor!!! Thanks to this program, we shaved probably 3 years off the learning curve and countless hours of frustration.”


You have Successfully Subscribed!

Kevin's Story

“I took AZREIA’s Launch Pad program with Alan Langston. I found it to be very helpful as a “newbie” to REI.

The program, over 4-hours long, walked me through what my initial strategy and tactics should be for me to reach my goals. It even told me if I should even be an REI to begin with. Yes, it was that detailed.

Best of all Alan showed me how only a single SFH rented out at $2k/mth could get me to my retirement goals in 10 years!”


You have Successfully Subscribed!

Who We Are!

AZREIA, Arizona Real Estate Investors Association, is a professional association that exists to serve the needs of independent real estate investors. We provide market information and analysis, education, networking opportunities, implementation guidance, and support to assist our members in achieving success in real estate investing. Since our founding in 2002, we have helped thousands of real estate investors.

  • We believe real estate investing can help anyone achieve their financial goals. Success is a process and real estate investing over the long-term can provide exceptional results. Your results are dependent on your commitment to success and the effort you put forth in addition to market factors both seen and unseen. Not everyone is willing to commit and do what is necessary (legally, ethically and morally) to succeed. We do not believe in “get rich quick”! Please take our FREE Entrepreneurial Self Assessment to better understand your suitability for real estate investing. It takes about 20 minutes.
  • We believe planning is an essential element to reaching your desired outcome. We feel our Launch Pad program for new investors is an exceptional planning process for new real estate investors that will keep you focused, take months off your development cycle and give you a much better opportunity for success. Launch Pad is available to everyone. It is available for AZREIA members at the small price of $30. Non-members may attend on a space available basis but pay a non-refundable $100 fee to attend.
  • We believe strongly in education and offer reasonably priced education both internally and from respected educators outside of AZREIA. We are not mentors or coaches. We do not offer these type of high cost programs.
  • We believe networking is critical to any investor’s success. Networking with a purpose will help you build or improve your team, understand how others are successful, learn different investing techniques, acquire property, find money partner and much more. We believe networking is the second most important aspect to successful investing falling only behind implementing a well thought out plan. In support of this belief, AZREIA offers several networking opportunities every month.
  • We believe an association should bring purchasing power to its members. AZREIA has exceptional benefits that save our members money, increase their profits and simplify their business.
  • We believe and enforce our strong Code of Ethics. (CLICK TO VIEW)

AZREIA is believed to be the largest REIA in the country. We have been the most highly recognized REIA by the National Real Estate Investors Association. No other REIA has earned the REIA of the Year Award as many times as AZREIA. Additionally, National REIA has recognized AZREIA’s education program, community program and Government Affairs program as the best. National REIA has also honored AZREIA as being the Most Innovative. Locally, the Phoenix and Tucson Business Journals have listed AZREIA among the Top 10 Professional Associations.


You have Successfully Subscribed!

Will real estate investing solve my problem?

Most people consider investing in real estate as a way to solve an issue or issues in their life. The good news is real estate investing can work for anyone. So, the quick answer to the question is yes, real estate investing is a good way to solve many financial issues.

The bad news is many times a person will not take the necessary steps to ensure success in real estate investing. So, while real estate investing will work for anyone, it will not work for everyone. If you are committed and take the necessary actions (legally, ethically and morally) your probability of success is very high.

We encourage all new investors to complete AZREIA’s FREE Entrepreneurial Self Assessment. This 20 minute exercise will help you determine if real estate investing is right for you. Also, you will understand the type of investing most suited to your personal situation. [CLICK HERE to take the Entrepreneurial Self Assessment] Based on your results, you may determine to complete Launch Pad.

At AZREIA, we have a path for all people considering real estate investing to follow as a way to get started and determine if real estate investing will work for you. We call it Launch Pad!

Launch Pad is a planning process that when completed provides most new investors with the following:

  1. Your Optimal Investing Path
  2. Your Preferred Property Type
  3. Your Property Acquisition Plan
  4. Your Funding Plan
  5. Your Educational Plan
  6. Your Team Building Plan
  7. Your Networking Plan
  8. Your Beginning Timeline

We’re sure you noticed that each one of the above eight items begins with “Your”. That is because every investor is different. Your needs are unique to you, so your plan needs to be specifically designed to meet those needs. Also, your plan should fit in with your current life situation.

Here’s the kicker…. Going through the Launch Pad process will also determine if real estate investing will work for you at this time in your life. If so, great! You have a plan to implement. If not, isn’t it better to know that up front and save you a lot of time, money and anguish? At that point, you can consider other ways to solve the problems you are facing.

Consider registering for our next Launch Pad session. You will need to set aside about four hours to complete the process. If you are an AZREIA member, there is a small $30 fee for Launch Pad. Non-members may attend on a space-available basis but pay a non-refundable $100 fee to attend.

You have Successfully Subscribed!

New to Real Estate Investing: How AZREIA Membership Helps Me

Congratulations! Just knowing that real estate investing will help you means you’re off to a great start to achieving your financial goals. As an AZREIA member and new to real estate investing we take all of the guesswork out. You start by completing Launch Pad and then the rest of the items listed below. There is a Launch Pad session about every 30 – 45 days. This process will take months off your development time and gets you started doing deals as soon as possible.

1. Register for and complete Launch Pad – Proper planning is the major differentiator between those who succeed and those who don’t. We are so committed to you getting off to a great start that Launch Pad is included for AZREIA members for just $30. This four-hour session provides most new investors the following eight critical items:

  1. Your Optimal Investing Path
  2. Your Preferred Property Type
  3. Your Property Acquisition Plan
  4. Your Funding Plan
  5. Your Educational Plan
  6. Your Team Building Plan
  7. Your Networking Plan
  8. Your Beginning Timeline

We’re sure you noticed that each one of the above eight items begins with “Your”. That is because every investor is different. Your needs are unique to you, so your plan needs to be specifically designed to meet those needs. Also, your plan should fit in with your current life situation.

Register for the next available Launch Pad session: VIEW CALENDAR

2. Start implementing your Launch Pad Plan immediately! Your personal Launch Pad plan tells you what to do and when to do it. So, schedule the education you need. Begin building your team. Attend the networking sessions important to your plan. Implement your Acquisition Plan. Time to get going! It’s all in your Launch Pad plan!

3. Review the latest Market Update in the Member Resources tab in the Member’s Area of this website. As an investor it is important that you stay informed on the market. Creative real estate investing means being able to respond to market conditions in your negotiations, marketing, acquisitions, pricing, etc. It will take you a while to become comfortable with market trends. Attending the Market Update and Market News segments of AZREIA’s monthly meetings will help you understand trends and directions important to your investing.

4. Optional: View the Success Factors video series by CLICKING HERE. This free, one-hour, six-part video covers several important topics for new investors:

  1. What Will Be Covered
    1. Goal Setting
    2. Getting You Started Quickly
    3. Taking Months Off Your Ramp Up Time
    4. Getting You Connected
    5. Reducing Mistakes
  2. Jumping Right In!
    1. Getting in the Right Mindset to Succeed
    2. Top 5 Success Factors
    3. Separating Fact from Myth
    4. Understanding Different Investing Strategies
  3. Education: Spending Your Dollars Wisely
    1. Education You Need Versus Unnecessary Education
    2. Mentors: What You Need to Understand Before Spending Your Money
  4. It’s All for Nothing if You Don’t Do a Deal
    1. Finding Deals
    2. Getting Money for Deals
  5. Tools for Success
    1. Building Your Team
    2. Leveraging the Market Update
  6. Time to Get Started!
    1. Look Out!
    2. Your Next Steps

You have Successfully Subscribed!

Experienced Investors

Congratulations! You are somewhere along the path to achieving your objectives. Maybe you have rehabbed a couple of houses or acquired a few rentals. Possibly you have already achieved your objectives and are fully living the life you dreamed. Regardless of where you are on your path, an AZREIA membership will benefit you by helping you get to your goals faster, increasing the margins on your current investments and simplifying your business.

Seven Ways AZREIA Will Help You

1. Market Information – Market knowledge sets you apart from your competition. How you use the knowledge and information will be unique to you and your needs. Valued market information will help you adjust your investing to current market conditions, so you don’t miss opportunities. The knowledge you gain from this valuable tool will help you communicate as an expert. It will help you raise money from investors. You will justify pricing and offers based on market trend analysis. The Market Update is invaluable and free to members.

2. Controlling Your Cost & Saving Money – AZREIA members have access to exclusive benefits from dozens of our Business Associates and major national companies like The Home Depot where members can qualify for 2% rebate and receive exclusive pricing on paint, cabinets and appliances. AZREIA members on average save over $1000 per year each through our expansive relationships. Experienced members save many thousands of dollars each year.

3. Simplify Your Business – Real Estate investing is constantly changing. New processes, new technology, new creative techniques are always coming along. AZREIA will keep you at the forefront of it all.

4. Networking – The most successful investors realize the tremendous value of networking. AZREIA makes it simple to network with a purpose. From the structured networking of the Phoenix Real Estate Club designed for experienced investors to achieve results to great networking opportunities at all our strategy based subgroups, we have made networking effortless.

5. Improving Your Team – We know you already have a team in place. You wouldn’t be a successful investor without one. Through AZREIA’s Business Associate Program it is very possible you will improve your team with experts in virtually all of the services and products you will need. You know the value of having an experience, expert team. If you need to upgrade your team, AZREIA can help.

6. Education – You’re successful, so you are smart as it relates to investing. AZREIA’s most successful investors continuously invest in their advanced education. AZREIA’s reputation allows us the benefit to be very picky on the national educators we bring to our members. We realize it is important for you to understand the latest techniques and how to integrate them into your current investing.

7. Two Things Successful Experienced Investors Need To Do – We have found that time constraints often prevent or delay experienced investors from doing two thing that will protect their long term success – proper insurance coverage and exceptional asset protection. AZREIA will assist you in understanding your insurance coverage and asset protection. We are not an insurance company or attorneys and will not give you advice. We will help you to understand what you need to know and the questions you must have answers to in both of these critical areas. There is no reason to work a lifetime for success and give it away in a day. Don’t be “one of those investors” with a story. Preventing the loss of success is possible and something every investor should do.

You have Successfully Subscribed!

Help for Non-Members

Naturally we can help you more if you are an AZREIA member, but there are several things you can do as a non-member.

1. Take our FREE Entrepreneurial Self Assessment. This first step of our Launch Pad program helps you better understand your suitability for Real Estate Investing. It takes about 20 minutes to complete. [CLICK HERE to take the Entrepreneurial Self Assessment]

2. View the Success Factors videos. This free one-hour, six-part video series (CLICK HERE to view) covers several important topics for new investors:

    • What Will Be Covered – Goal Setting, Getting You Started Quickly, Taking Months Off Your Ramp Up Time, Getting You Connected, Reducing Mistakes
    • Jumping Right In! – Getting in the Right Mindset to Succeed; Top 5 Success Factors; Separating Fact from Myth; Understanding Different Investing Strategies
    • Education: Spending Your Dollars Wisely – Education You Need Versus Unnecessary Education; Mentors: What You Need to Understand Before Spending Your Money
    • It’s All for Nothing if You Don’t Do a Deal – Finding Deals & Getting Money for Deals
    • Tools for Success – Building Your Team & Leveraging the Market Update
    • Time to Get Started! – Look Out!; Your Next Steps

3. Take a Launch Pad session. This is free for members, but it is available to non-members for a fee on a space available basis. Launch Pad is a planning process when completed provides most new investors with the following:

    • Your Optimal Investing Path
    • Your Preferred Property Type
    • Your Property Acquisition Plan
    • Your Funding Plan
    • Your Educational Plan
    • Your Team Building Plan
    • Your Networking Plan
    • Your Beginning Timeline

I’m sure you noticed that each one of the above eight items begins with “Your”. That is because every investor is different. Your needs are unique to you, so your plan needs to be specifically designed to meet those needs. Also, your plan should fit in with your current life situation.

Register for the next available Launch Pad session: VIEW CALENDAR

4. Attend AZREIA meetings as a guest. There is a reasonable guest fee which is discounted if you register online.

    • The Market Update is presented at our Monthly Meetings, so you are able to receive this valuable information. (Only members may download and use the charts and data.)
    • You may meet AZREIA Business Associates in the Tradeshow during our Monthly Meetings. This will give you access to exceptional product and service providers that successful real estate investors use.
    • Networking at our Monthly Meetings is unsurpassed. As a non-member you may take full advantage of this opportunity.

5. Please enjoy our Blog of interesting articles by industry experts. Access our blog by CLICKING HERE.

6. The best way we can help you is to convince you to become a member. Our benefits are extensive. Our average registered member receives several hundred dollars in rebates and exclusive AZREIA discounts from The Home Depot. Discounts on education and services/products from our Business associates ensure you save big. Every AZREIA member should receive many times their annual dues back just through our rebates and discounts.

Please consider our “Build-Your-Own” membership plan as a cost-efficient way to fully participate in AZREIA. At only $60 a year under our current promotion and low meeting costs it is an ideal way to get started.

You have Successfully Subscribed!