A Good Investment....

A general rule to keep in mind is that, homes appreciate about 4-5% a year.  Some years maybe more or less, and differ depending on where it’s located. 

At first, 5% may not seem like a lot.  At times, stocks appreciate more, and could easily earn you over the same return with a safe investment in treasury bills or bonds.

Assume that you bought a $200,000 home that you didn’t pay cash for and you have a mortgage, too.  You put up to 20% down that would be an investment of $40,000.

With a rate of 5% appreciation annually, a $200,000 home would go up in value $10,000 over the duration of the first year.  What this means is that you’ve earned $10,000 from a $40,000 investment.  That makes your annual return on investment 25%.

Keep in mind that, you would be making mortgage payments, paying property taxes, and other costs.  But, because the interest on your mortgage and your property taxes are deductible, your home purchase is basically being subsidized by the government.

So in conclusion, your return rate when buying a home is higher than, most any other investment you could make.

Getting Started In Real Estate Investing, Using Basic Rental Properties!

Buying a residential property and renting it out is the most common way to get into investing in real estate.  Being the owner/ landlord you’ll be responsible for paying the mortgage, taxes, and the costs of maintaining the property.  

The whole point of investing is to have enough money to pay these costs as well as turning a profit, So You may want to charge more for rent while you have a mortgage, but you should stay patient and only charge enough rent to cover your expenses until the mortgage has been paid.  

Once the mortgage has been paid at that time the majority of the rent becomes your profit.  Your property could have also appreciated in value over the duration of the mortgage, leaving you (the owner) with a more valuable asset.  

You should also be aware of the fact that you could end up with a bad tenant who damages the property or end up without a tenant at all.  You would be left with a negative cash flow, and might have to find another way to cover your mortgage payments.

Be sure that you find the right property.  Pick an area where vacancy rates are low (due to demand) and choose a place that people will want to rent.

When you make the decision to invest in rental property, you should be aware of and prepared for the many responsibilities that come along with being a landlord.

If you are an investor and would like assistance locating or managing a property, feel free to send me a message or give me a call by clicking here...