When acquiring property for a long time old, you're buying both for long term appreciation as well as monthly cash flow.
You're not in the game for aquick flip, but a longer term investment.
There's no rule of thumb particularly that says a particular type of property is designed to flip and one to hold as each prospective purchase will present its own set of opportunities.
Yet one popular way to handle an investment property is to live in it.
How's that? With mortgage rates still near historic lows and real estate values not only stabilizing but increasing in price, it's an opportune time to buy investment property with long term financing.
And when you buy a two to four unit property instead of a single family residence, you can essentially live mortgage free while earning extra money along the way.
Here's an example.
Say a duplex is listed for sale at $250,000.
You put 20 percent down and the loan amount is $200,000.
Mortgage lenders consider a duplex to be an owner occupied unit and not an investment property.
This is key when applying a mortgage rate to a purchase as mortgage rates for rentals are higher than those for a primary residence.
As long as you live in one of the units, it's a primary residence.
Now apply a 30 year fixed rate of 4.
00 percent for a principal and interest payment of $954.
If the monthly property tax bill is $200 and insurance $75, the total house payment is $1,229.
When you considered buying the property, you found that the tenants were paying $2,000 per month for rent.
$2,000 - $1,229 = $771.
By buying a duplex and living in one of the units, you're living mortgage-free, pocketing an extra $771 per month and watching your asset appreciate year over year.
Go ahead, do the math.
It works almost every single time.
You're not in the game for aquick flip, but a longer term investment.
There's no rule of thumb particularly that says a particular type of property is designed to flip and one to hold as each prospective purchase will present its own set of opportunities.
Yet one popular way to handle an investment property is to live in it.
How's that? With mortgage rates still near historic lows and real estate values not only stabilizing but increasing in price, it's an opportune time to buy investment property with long term financing.
And when you buy a two to four unit property instead of a single family residence, you can essentially live mortgage free while earning extra money along the way.
Here's an example.
Say a duplex is listed for sale at $250,000.
You put 20 percent down and the loan amount is $200,000.
Mortgage lenders consider a duplex to be an owner occupied unit and not an investment property.
This is key when applying a mortgage rate to a purchase as mortgage rates for rentals are higher than those for a primary residence.
As long as you live in one of the units, it's a primary residence.
Now apply a 30 year fixed rate of 4.
00 percent for a principal and interest payment of $954.
If the monthly property tax bill is $200 and insurance $75, the total house payment is $1,229.
When you considered buying the property, you found that the tenants were paying $2,000 per month for rent.
$2,000 - $1,229 = $771.
By buying a duplex and living in one of the units, you're living mortgage-free, pocketing an extra $771 per month and watching your asset appreciate year over year.
Go ahead, do the math.
It works almost every single time.