12.31.2006

Real Estate without $500,000

I’m sure that many homeowners will say that their house is the biggest investment they’ve ever made, right? Well there is a way to make real estate not only a long term investment, but a low risk, short term investment with huge returns! And you have the added bonus of bragging to your friends that you have two houses. What’s the catch? No, really, I’m asking you, what’s the catch?

So it’s a very simple process. Do some research on the houses you like. How old it is, how much the previous owners paid for them, stuff like that. Then take out a mortgage with as low interest rates as possible, and purchase it. It is preferred if it’s a fairly run-down house so you can get it for cheap. Ask your friends to help you fix it up, then rent it out.

Here are some numbers to get the juices going. If you buy a fairly run down house for 225,000 dollars, and you fix it up and you collect 1,500 dollars rent each month, it would take about 20 years to pay it off. After that you would be getting an extra 1,500 dollars a month, plus the house should be worth about 600,000 dollars! There’s a big chunk of your retirement fund, right there!

5 comments:

Michael M said...

20 years is a long time. Still worth it though.

Munnybagz said...

DAMN STRAGHT!

Michael M said...

Heh…

John Brooman said...

OK Paris, so I own a house with a new mortagage and fixed income. How do I make the second home purchase given my income only allows for so much debt ratio? I want to buy the second house and get onto your plan as soon as possible however I do not know how the bank will lend me anymore money. I do know how to fix up the second house so the rest of your plan is relatively easy to accomplish. What do I do?

Munnybagz said...

How do you know my name? Are you spying on me and asking questions like that because my dad told me to?
Welll in your situation what i would do is take a look at the continous expenses in your life, such as internet, or cable, and if you really don’t need them, just get rid of them. No more going out for dinne or movies, just try to live life as full as you can with as few expenses as possible. Then, once you’ve freed up a little bit of money, keep saving that amount every week for maybe a year or two. Then try and get a loan, show them you have a deposit on the house, and then, as soon as you get the mortgage, rent out the house. That way you don’t even have to pay a mortgage out of your pocket, becuase the house is paying it for you! Which means you’ve freed up money for your “fun fund” again. By the way, it’s usually a good idea to ask the bank for a loan instead of assuming.