The term leverage in the world of finance is defined as borrowing money to purchase a company and relying on it to produce enough capital to cover the interest payable on the loan. This is the type of leverage that investment in real estate properties provides.
You do not have to be rich to invest. The goal, of course, is to make money for the long term. The principle is rather simple: spend a little to make a lot. Take the $10,000 you have accumulated in equity, use it as a down payment on an investment property that has a positive cash flow, use the cash flow to pay the mortgage and your investment will appreciate into ten times the original amount over time.
It is interesting to note that after you have invested in a property; your net worth has increased substantially from your initial investment. Let?s take that $10,000 and buy a piece of property with a fair market value of $100,000. The $10,000 is 10% of the value and makes a nice down payment. The mortgage is now $90,000 and you have equity of $10,000. Your net worth has increased by $90,000.
Let?s say the property produces a cash flow of $900 per month. The monthly note on a 30-year loan at 7% is only $598. Your positive cash flow is $302. If you paid all the cash flow into the monthly payment, and if you bought the property in 2006, you would have the property paid off in 2019 ? 13 years ? and the interest you save would be over $121,000.
There are two directions you could go. One is to buy and hold. This means that you buy this property and you hold on to it with everything you have. It absolutely should increase in fair market value. You should see increases in cash flow. You could add these increases to your note and then you could be realizing in a short period of time a nice, regular income from this piece of property. That retirement nest egg would be actively working for you over numerous years until retirement and through retirement.
If you think you do not have the time between now and when you want to retire, think again. The other direction may be for you. You could build some equity in the property we talked about above. Then you could trade up using the equity you built in making double payments and investment tax incentives.
You should always trade up in value or equal in value in order to benefit from the tax savings. When you take this route, you will actually be raising your net worth by much more than equity because you will be steadily increasing your net worth by more than just the cash flow from your investment.
If you were to take the fast-track accumulated equity you have built by paying double or triple the principle each month and trade up to a property worth $200,000 rather than $100,000, you could double your cash flow and pay off the mortgage in 16 years. That would give you a hefty cash flow at retirement with a very small initial investment.
About the Author:
Investment Property Specialist - Alex Anderson Connects Real Estate Investors With High-Quality Investment Properties. Get A Free Copy Of, “The Investor’s Rental Guide” at: www.GreatInvestmentProperty.com
Tags: 13 Years, Borrowing Money, Finance, Initial Investment, Investing, Investment Properties, Investment Property, Leverage, Mortgage, Net Worth, Period Of Time, Positive Cash Flow, Principle, Real Estate Properties, Retirement Nest Egg, Short Period
With so many people making tremendous amounts of money in property or real estate it’s no wonder so many are looking at real estate as an investment. It offers more security than the stock market, provides great potential returns, offers tax benefits and it sounds cool to be ‘in real estate’.
One challenge many are faced with is the money to acquire a piece of property. You’ve heard, “I would love to invest in real estate, but I just can’t afford to!” Hardly anyone who buys a piece of real estate has enough money to pay for it. That’s where your banker comes in.
Owning your own home may sound like a somewhat obvious way to get started in real estate, but it is also a very good way to do so. This step is overlooked by a lot of people. Just take a look at how many people are still renting a property instead of buying one. People rent because in their mind, “they don’t have enough money to buy a house.” In reality it would be much cheaper for them to buy!
When you rent,you’re not building anything long term. Every dollar you spend on rent is a dollar you will never see again. If you own your own home, you would be paying your mortgage. The basics of practically all mortgages are more or less the same. Every month you make a payment which consists of two parts: interest and principle. Interest can be compared to rent. Those dollars are gone and you will never hear from them again. The part of the payment that goes to the principle is money you keep. Every dollar used to pay off the principal is a dollar you put in your own pocket.
So if you’re thinking about getting started in real estate and you don’t ‘own’ your own house yet… Change it, and get some experience. It’s a great first step towards building your capital and it makes more sense financially. There are opportunities for accelerating the process of building your net worth. When real estate prices go up, so does the value of your property. The money you owe the bank, your mortgage, remains the same. In other words this helps you build your net worth. People that pay rent… Their net worth does nothing. Their landlord’s net worth is doing very nicely in this scenario and he or she will probably love you for it. So if you get a warm feeling about making somebody else rich at your own expense… keep renting. To build your own capital … Buy your own house!
Many home owners have accumulated more money through appreciation of their property than by working a full time job for years. Before you go out and buy the first property you see, don’t forget some security measures are in order. As you may or may not know, real estate prices do not always go up. This can be shocker to some people, as well as an ugly reminder for those who overlooked this minor detail. If for some reason you would have to sell your home in a down market, it can be a costly adventure. You wouldn’t be the first to end up with a house worth considerably less than the mortgage. Make sure to keep some slack. Overall, real estate prices have always been on the rise, but in any cycle there are down periods. By keeping some slack and being patient you will be able to sit through these times and profit from the long term up-trend.
About the Author: With many years in the industry of property or real estate, host, Sintilia Miecevole’s site http://www.miraproperty.com will help you with searches from taxes, listings including residential, commercial and land to unclaimed property, vacation, waterfront and much more. Be sure to visit http://www.miraproperty.com for further information.
Tags: Dollar, First Steps, Getting Started In Real Estate, How Many People, Invest, Investing, Investment, Love, Money To Buy A House, Mortgage, Mortgages, Net Worth, One People, Principle Interest, Real Estate One, Real Estate Prices, Real Money, Rent, Renting A Property, Stock Market
When non-traditional methods are used to buy or sell a property, it is termed as creative real estate investing. It refers to unusual methods used for selling or acquiring real estate. Many kinds of creative real estate investing are practiced frequently.
Popular Types of Creative Real Estate Investing Techniques:
Seller Financing: This is an unusual real estate investing technique where the property owner offers to finance the buyer! The owner typically lends a portion of the equity to the buyer and receives regular monthly payments. The mode of repayment may differ, it may be a principle only payment and interest may be fixed or variable, all depending on the contract agreed upon by both of them. Sometimes the buyer gets to assume the sellers loan, which is written as an all inclusive trust deed. Loans for commercial property are termed as assumable loans where as residential loans are termed non-assumable. These two techniques are used widely among the creative real estate investing techniques.
Lease Options: This refer to a person signing a lease as well as an option to purchase the leased property within a fixed amount of time. The options usually are for short durations of time like 12 months etc. and the lessee agrees to pay an additional amount as an option fee which will be forfeited should the option not be carried through. There are lease purchase options that make it mandatory for a lessee to buy the property with the term of the option. The price of the property is fixed at the time of the agreement and no matter what the land value; the lessee has to pay the amount stated in the agreement. Sandwich lease options are methods of buying a lease option and immediately selling it to another buyer for a profit, which will be shared by the owners.
When mortgages are defaulted the owner may try selling the property to the lender asking him to accept a lesser amount than what is owed in the mortgage.
Another technique is to buy bulk property from banks etc and sell them individually for a small profit. Using tax liens to acquire property is also a creative real estate investing technique. Investors buy tax liens from the government and should the homeowner default, the investor may foreclose the house. Some people buy a property that is ugly or old and unfit, make a few changes and give it a facelift, and are able to sell it for a huge profit.
The scope for being successful by investing in real estate is astounding. With careful planning and using creative real estate investing techniques, a person can make a huge profit as well as build a successful career dealing in real estate.
Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.
Business Owners all across the country are joining “The Community of Small Business Owners? to receive and provide strategies, insight, tips, support and more on starting, managing, growing, and selling their businesses. As a member, you will have access to true Millionaire Business Owners who will provide strategies and tips from their real-life experiences.
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Tags: 12 Months, Amount Of Time, Assumable Loans, Banks, Creative Real Estate, Creative Real Estate Investing, Lease Option, Lease Options, Lease Purchase Options, Lessee, Mortgage, Mortgages, Option Fee, Principle, Property Owner, Real Estate Investing, Residential Loans, Sandwich, Seller Financing, Trust Deed Loans
The term leverage in the world of finance is defined as borrowing money to purchase a company and relying on it to produce enough capital to cover the interest payable on the loan. This is the type of leverage that investment in real estate properties provides.
You do not have to be rich to invest. The goal, of course, is to make money for the long term. The principle is rather simple: spend a little to make a lot. Take the $10,000 you have accumulated in equity, use it as a down payment on an investment property that has a positive cash flow, use the cash flow to pay the mortgage and your investment will appreciate into ten times the original amount over time.
It is interesting to note that after you have invested in a property; your net worth has increased substantially from your initial investment. Let?s take that $10,000 and buy a piece of property with a fair market value of $100,000. The $10,000 is 10% of the value and makes a nice down payment. The mortgage is now $90,000 and you have equity of $10,000. Your net worth has increased by $90,000.
Let?s say the property produces a cash flow of $900 per month. The monthly note on a 30-year loan at 7% is only $598. Your positive cash flow is $302. If you paid all the cash flow into the monthly payment, and if you bought the property in 2006, you would have the property paid off in 2019 ? 13 years ? and the interest you save would be over $121,000.
There are two directions you could go. One is to buy and hold. This means that you buy this property and you hold on to it with everything you have. It absolutely should increase in fair market value. You should see increases in cash flow. You could add these increases to your note and then you could be realizing in a short period of time a nice, regular income from this piece of property. That retirement nest egg would be actively working for you over numerous years until retirement and through retirement.
If you think you do not have the time between now and when you want to retire, think again. The other direction may be for you. You could build some equity in the property we talked about above. Then you could trade up using the equity you built in making double payments and investment tax incentives.
You should always trade up in value or equal in value in order to benefit from the tax savings. When you take this route, you will actually be raising your net worth by much more than equity because you will be steadily increasing your net worth by more than just the cash flow from your investment.
If you were to take the fast-track accumulated equity you have built by paying double or triple the principle each month and trade up to a property worth $200,000 rather than $100,000, you could double your cash flow and pay off the mortgage in 16 years. That would give you a hefty cash flow at retirement with a very small initial investment.
About the Author:
Investment Property Specialist - Alex Anderson Connects Real Estate Investors With High-Quality Investment Properties. Get A Free Copy Of, “The Investor’s Rental Guide” at: www.GreatInvestmentProperty.com
Tags: 13 Years, Borrowing Money, Finance, Initial Investment, Investing, Investment Properties, Investment Property, Leverage, Mortgage, Net Worth, Period Of Time, Positive Cash Flow, Principle, Real Estate Properties, Retirement Nest Egg, Short Period
What?s so great about having private money for real estate investing? Have you ever looked a fantastic deal square in the eye and had to walk away because you weren?t in a position to move on it? If so, ready access to private money could have made the difference.
Having a reliable supply of private money for real estate investing gives you two things you need to be super-successful? confidence and flexibility. Let?s see why?
First, imagine that your marketing is working like it should, and you?re getting calls from highly motivated sellers anxious to get out from under their property. Further, let?s assume you?re already in the middle of a deal or two, and you have, say, a quarter of a million dollars tied up for the next few months.
You get a call from Mr. Gotta Getoutnow, who has already moved and is shouldering two huge house payments. His vacant house, valued conservatively at $190,000, is costing him a cool $1200 each month? and he hasn?t lived in it for 6 months! He?s willing ? even anxious - to let it go, if you?ll just cash him out of his mortgage to the tune of $132,000.
Unfortunately, your marginal credit rating won?t permit another loan, your cash is tapped, and your house is already mortgaged to the hilt for those other deals you?ve got working. How much confidence do you have on the phone with Mr. Getoutnow? My guess? not much! But how much could you have if you knew you had access to a half million or so in private money for real estate investing?
See the difference? I thought so!
Now, when you get his call, instead of hemming and hawing about some nebulous ?creative acquisition techniques? you?ve used successfully in the past, trying to impress him with your vast knowledge and experience, you simply tell Mr. Getoutnow, ?I?ll be right over,? and off you go to get the house under contract. You have the confidence to do this because you know, comfortably resting in your hip pocket, is all the private money for real estate investing you could possibly need!
What about flexibility? How does private money for real estate investing give you that?
The answer is in the options private money for real estate investing gives you. Let?s face it, the number one stress inducer in real estate ? other than tenants ? has got to be obtaining financing and working with lenders. Why? Because they want so much freakin? information, that?s why.
If you?re like me, you can?t stand filling out all those forms banks ask you to fill out. What could they possibly need all that information for anyway? I mean, come on. It?s a loan, here?s the property, it?s worth $150k, I need a loan for $100K, what?s the problem? When you have private money for real estate investing, you don?t fill out forms!
Not only that, but what?s up with those lenders having to hammer my credit report every time I get a loan? First there?s an inquiry, then they add the loan to my list of debts, so the whole world knows my business. I?m definitely NOT down with that. Now that I have all the private money for real estate investing I could possibly need, there?s no hits on my credit report, and nobody ever sees the debt listed. I don?t have to worry the next time I go to apply for a car loan that I?m going to have to answer a whole bunch of stupid, embarrassing questions. I?m a happy guy!
Heck, I?m just about the most confident, flexible guy in town, thanks to my ability to raise private money for real estate investing! I can?t say this strongly enough?
You?ve got to figure out how to get some of your own!
For more information, and a more in-depth article, visit Private Money For Real Estate Investing on my website.
Now, go make more offers!
Crush The Biggest Obstacle to Your Success in Real Estate… or Anything Else! Download my FREE report HERE! Tom Dunn is a successful real estate investor and author of the popular DealFiles Real Estate Investor Stories free newsletter. You are welcome to share this report, unedited and in it’s entirety, with anyone you like. You may not remove this text. ? 2007 by Tom Dunn. Website: http://www.dealfiles.com e-mail: tom@dealfiles.com
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Tags: Acquisition Techniques, Confidence, Credit Rating, Flexibility, Guess, Hilt, Hip Pocket, Marginal Credit, Marketing, Million Dollars, Money Investing, Mortgage, Motivated Sellers, Private Money, Real Estate Investing
When non-traditional methods are used to buy or sell a property, it is termed as creative real estate investing. It refers to unusual methods used for selling or acquiring real estate. Many kinds of creative real estate investing are practiced frequently.
Popular Types of Creative Real Estate Investing Techniques:
Seller Financing: This is an unusual real estate investing technique where the property owner offers to finance the buyer! The owner typically lends a portion of the equity to the buyer and receives regular monthly payments. The mode of repayment may differ, it may be a principle only payment and interest may be fixed or variable, all depending on the contract agreed upon by both of them. Sometimes the buyer gets to assume the sellers loan, which is written as an all inclusive trust deed. Loans for commercial property are termed as assumable loans where as residential loans are termed non-assumable. These two techniques are used widely among the creative real estate investing techniques.
Lease Options: This refer to a person signing a lease as well as an option to purchase the leased property within a fixed amount of time. The options usually are for short durations of time like 12 months etc. and the lessee agrees to pay an additional amount as an option fee which will be forfeited should the option not be carried through. There are lease purchase options that make it mandatory for a lessee to buy the property with the term of the option. The price of the property is fixed at the time of the agreement and no matter what the land value; the lessee has to pay the amount stated in the agreement. Sandwich lease options are methods of buying a lease option and immediately selling it to another buyer for a profit, which will be shared by the owners.
When mortgages are defaulted the owner may try selling the property to the lender asking him to accept a lesser amount than what is owed in the mortgage.
Another technique is to buy bulk property from banks etc and sell them individually for a small profit. Using tax liens to acquire property is also a creative real estate investing technique. Investors buy tax liens from the government and should the homeowner default, the investor may foreclose the house. Some people buy a property that is ugly or old and unfit, make a few changes and give it a facelift, and are able to sell it for a huge profit.
The scope for being successful by investing in real estate is astounding. With careful planning and using creative real estate investing techniques, a person can make a huge profit as well as build a successful career dealing in real estate.
Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.
Business Owners all across the country are joining “The Community of Small Business Owners? to receive and provide strategies, insight, tips, support and more on starting, managing, growing, and selling their businesses. As a member, you will have access to true Millionaire Business Owners who will provide strategies and tips from their real-life experiences.
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Tags: 12 Months, Amount Of Time, Assumable Loans, Banks, Creative Real Estate, Creative Real Estate Investing, Lease Option, Lease Options, Lease Purchase Options, Lessee, Mortgage, Mortgages, Option Fee, Principle, Property Owner, Real Estate Investing, Residential Loans, Sandwich, Seller Financing, Trust Deed Loans
With so many people making tremendous amounts of money in property or real estate it’s no wonder so many are looking at real estate as an investment. It offers more security than the stock market, provides great potential returns, offers tax benefits and it sounds cool to be ‘in real estate’.
One challenge many are faced with is the money to acquire a piece of property. You’ve heard, “I would love to invest in real estate, but I just can’t afford to!” Hardly anyone who buys a piece of real estate has enough money to pay for it. That’s where your banker comes in.
Owning your own home may sound like a somewhat obvious way to get started in real estate, but it is also a very good way to do so. This step is overlooked by a lot of people. Just take a look at how many people are still renting a property instead of buying one. People rent because in their mind, “they don’t have enough money to buy a house.” In reality it would be much cheaper for them to buy!
When you rent,you’re not building anything long term. Every dollar you spend on rent is a dollar you will never see again. If you own your own home, you would be paying your mortgage. The basics of practically all mortgages are more or less the same. Every month you make a payment which consists of two parts: interest and principle. Interest can be compared to rent. Those dollars are gone and you will never hear from them again. The part of the payment that goes to the principle is money you keep. Every dollar used to pay off the principal is a dollar you put in your own pocket.
So if you’re thinking about getting started in real estate and you don’t ‘own’ your own house yet… Change it, and get some experience. It’s a great first step towards building your capital and it makes more sense financially. There are opportunities for accelerating the process of building your net worth. When real estate prices go up, so does the value of your property. The money you owe the bank, your mortgage, remains the same. In other words this helps you build your net worth. People that pay rent… Their net worth does nothing. Their landlord’s net worth is doing very nicely in this scenario and he or she will probably love you for it. So if you get a warm feeling about making somebody else rich at your own expense… keep renting. To build your own capital … Buy your own house!
Many home owners have accumulated more money through appreciation of their property than by working a full time job for years. Before you go out and buy the first property you see, don’t forget some security measures are in order. As you may or may not know, real estate prices do not always go up. This can be shocker to some people, as well as an ugly reminder for those who overlooked this minor detail. If for some reason you would have to sell your home in a down market, it can be a costly adventure. You wouldn’t be the first to end up with a house worth considerably less than the mortgage. Make sure to keep some slack. Overall, real estate prices have always been on the rise, but in any cycle there are down periods. By keeping some slack and being patient you will be able to sit through these times and profit from the long term up-trend.
About the Author: With many years in the industry of property or real estate, host, Sintilia Miecevole’s site http://www.miraproperty.com will help you with searches from taxes, listings including residential, commercial and land to unclaimed property, vacation, waterfront and much more. Be sure to visit http://www.miraproperty.com for further information.
Tags: Dollar, First Steps, Getting Started In Real Estate, How Many People, Invest, Investing, Investment, Love, Money To Buy A House, Mortgage, Mortgages, Net Worth, One People, Principle Interest, Real Estate One, Real Estate Prices, Real Money, Rent, Renting A Property, Stock Market
What?s so great about having private money for real estate investing? Have you ever looked a fantastic deal square in the eye and had to walk away because you weren?t in a position to move on it? If so, ready access to private money could have made the difference.
Having a reliable supply of private money for real estate investing gives you two things you need to be super-successful? confidence and flexibility. Let?s see why?
First, imagine that your marketing is working like it should, and you?re getting calls from highly motivated sellers anxious to get out from under their property. Further, let?s assume you?re already in the middle of a deal or two, and you have, say, a quarter of a million dollars tied up for the next few months.
You get a call from Mr. Gotta Getoutnow, who has already moved and is shouldering two huge house payments. His vacant house, valued conservatively at $190,000, is costing him a cool $1200 each month? and he hasn?t lived in it for 6 months! He?s willing ? even anxious - to let it go, if you?ll just cash him out of his mortgage to the tune of $132,000.
Unfortunately, your marginal credit rating won?t permit another loan, your cash is tapped, and your house is already mortgaged to the hilt for those other deals you?ve got working. How much confidence do you have on the phone with Mr. Getoutnow? My guess? not much! But how much could you have if you knew you had access to a half million or so in private money for real estate investing?
See the difference? I thought so!
Now, when you get his call, instead of hemming and hawing about some nebulous ?creative acquisition techniques? you?ve used successfully in the past, trying to impress him with your vast knowledge and experience, you simply tell Mr. Getoutnow, ?I?ll be right over,? and off you go to get the house under contract. You have the confidence to do this because you know, comfortably resting in your hip pocket, is all the private money for real estate investing you could possibly need!
What about flexibility? How does private money for real estate investing give you that?
The answer is in the options private money for real estate investing gives you. Let?s face it, the number one stress inducer in real estate ? other than tenants ? has got to be obtaining financing and working with lenders. Why? Because they want so much freakin? information, that?s why.
If you?re like me, you can?t stand filling out all those forms banks ask you to fill out. What could they possibly need all that information for anyway? I mean, come on. It?s a loan, here?s the property, it?s worth $150k, I need a loan for $100K, what?s the problem? When you have private money for real estate investing, you don?t fill out forms!
Not only that, but what?s up with those lenders having to hammer my credit report every time I get a loan? First there?s an inquiry, then they add the loan to my list of debts, so the whole world knows my business. I?m definitely NOT down with that. Now that I have all the private money for real estate investing I could possibly need, there?s no hits on my credit report, and nobody ever sees the debt listed. I don?t have to worry the next time I go to apply for a car loan that I?m going to have to answer a whole bunch of stupid, embarrassing questions. I?m a happy guy!
Heck, I?m just about the most confident, flexible guy in town, thanks to my ability to raise private money for real estate investing! I can?t say this strongly enough?
You?ve got to figure out how to get some of your own!
For more information, and a more in-depth article, visit Private Money For Real Estate Investing on my website.
Now, go make more offers!
Crush The Biggest Obstacle to Your Success in Real Estate… or Anything Else! Download my FREE report HERE! Tom Dunn is a successful real estate investor and author of the popular DealFiles Real Estate Investor Stories free newsletter. You are welcome to share this report, unedited and in it’s entirety, with anyone you like. You may not remove this text. ? 2007 by Tom Dunn. Website: http://www.dealfiles.com e-mail: tom@dealfiles.com
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Tags: Acquisition Techniques, Confidence, Credit Rating, Flexibility, Guess, Hilt, Hip Pocket, Marginal Credit, Marketing, Million Dollars, Money Investing, Mortgage, Motivated Sellers, Private Money, Real Estate Investing
The term leverage in the world of finance is defined as borrowing money to purchase a company and relying on it to produce enough capital to cover the interest payable on the loan. This is the type of leverage that investment in real estate properties provides.
You do not have to be rich to invest. The goal, of course, is to make money for the long term. The principle is rather simple: spend a little to make a lot. Take the $10,000 you have accumulated in equity, use it as a down payment on an investment property that has a positive cash flow, use the cash flow to pay the mortgage and your investment will appreciate into ten times the original amount over time.
It is interesting to note that after you have invested in a property; your net worth has increased substantially from your initial investment. Let?s take that $10,000 and buy a piece of property with a fair market value of $100,000. The $10,000 is 10% of the value and makes a nice down payment. The mortgage is now $90,000 and you have equity of $10,000. Your net worth has increased by $90,000.
Let?s say the property produces a cash flow of $900 per month. The monthly note on a 30-year loan at 7% is only $598. Your positive cash flow is $302. If you paid all the cash flow into the monthly payment, and if you bought the property in 2006, you would have the property paid off in 2019 ? 13 years ? and the interest you save would be over $121,000.
There are two directions you could go. One is to buy and hold. This means that you buy this property and you hold on to it with everything you have. It absolutely should increase in fair market value. You should see increases in cash flow. You could add these increases to your note and then you could be realizing in a short period of time a nice, regular income from this piece of property. That retirement nest egg would be actively working for you over numerous years until retirement and through retirement.
If you think you do not have the time between now and when you want to retire, think again. The other direction may be for you. You could build some equity in the property we talked about above. Then you could trade up using the equity you built in making double payments and investment tax incentives.
You should always trade up in value or equal in value in order to benefit from the tax savings. When you take this route, you will actually be raising your net worth by much more than equity because you will be steadily increasing your net worth by more than just the cash flow from your investment.
If you were to take the fast-track accumulated equity you have built by paying double or triple the principle each month and trade up to a property worth $200,000 rather than $100,000, you could double your cash flow and pay off the mortgage in 16 years. That would give you a hefty cash flow at retirement with a very small initial investment.
About the Author:
Investment Property Specialist - Alex Anderson Connects Real Estate Investors With High-Quality Investment Properties. Get A Free Copy Of, “The Investor’s Rental Guide” at: www.GreatInvestmentProperty.com
Tags: 13 Years, Borrowing Money, Finance, Initial Investment, Investing, Investment Properties, Investment Property, Leverage, Mortgage, Net Worth, Period Of Time, Positive Cash Flow, Principle, Real Estate Properties, Retirement Nest Egg, Short Period
The term leverage in the world of finance is defined as borrowing money to purchase a company and relying on it to produce enough capital to cover the interest payable on the loan. This is the type of leverage that investment in real estate properties provides.
You do not have to be rich to invest. The goal, of course, is to make money for the long term. The principle is rather simple: spend a little to make a lot. Take the $10,000 you have accumulated in equity, use it as a down payment on an investment property that has a positive cash flow, use the cash flow to pay the mortgage and your investment will appreciate into ten times the original amount over time.
It is interesting to note that after you have invested in a property; your net worth has increased substantially from your initial investment. Let?s take that $10,000 and buy a piece of property with a fair market value of $100,000. The $10,000 is 10% of the value and makes a nice down payment. The mortgage is now $90,000 and you have equity of $10,000. Your net worth has increased by $90,000.
Let?s say the property produces a cash flow of $900 per month. The monthly note on a 30-year loan at 7% is only $598. Your positive cash flow is $302. If you paid all the cash flow into the monthly payment, and if you bought the property in 2006, you would have the property paid off in 2019 ? 13 years ? and the interest you save would be over $121,000.
There are two directions you could go. One is to buy and hold. This means that you buy this property and you hold on to it with everything you have. It absolutely should increase in fair market value. You should see increases in cash flow. You could add these increases to your note and then you could be realizing in a short period of time a nice, regular income from this piece of property. That retirement nest egg would be actively working for you over numerous years until retirement and through retirement.
If you think you do not have the time between now and when you want to retire, think again. The other direction may be for you. You could build some equity in the property we talked about above. Then you could trade up using the equity you built in making double payments and investment tax incentives.
You should always trade up in value or equal in value in order to benefit from the tax savings. When you take this route, you will actually be raising your net worth by much more than equity because you will be steadily increasing your net worth by more than just the cash flow from your investment.
If you were to take the fast-track accumulated equity you have built by paying double or triple the principle each month and trade up to a property worth $200,000 rather than $100,000, you could double your cash flow and pay off the mortgage in 16 years. That would give you a hefty cash flow at retirement with a very small initial investment.
About the Author:
Investment Property Specialist - Alex Anderson Connects Real Estate Investors With High-Quality Investment Properties. Get A Free Copy Of, “The Investor’s Rental Guide” at: www.GreatInvestmentProperty.com
Tags: 13 Years, Borrowing Money, Finance, Initial Investment, Investing, Investment Properties, Investment Property, Leverage, Mortgage, Net Worth, Period Of Time, Positive Cash Flow, Principle, Real Estate Properties, Retirement Nest Egg, Short Period
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