Cottage vs. Mortgage - PPV Fight

Earlier this morning, I was walking along the beach with my mom, and she told me, " There are two ways to get richer. Make more or desire less." Personally, I think it's actually easier to make more.
As we continued on our walk, Mom looked at lots of houses that she would have loved to own, but could not afford. So I set to work, thinking up different possibilities for each house or property we passed, thinking about how I could use the house and property to earn extra money, to help pay off a mortgage.

Something I noticed and had never really thought about before, was that lots of houses had little cottages that relatives would stay in when they visited. So what if you rented out your cottage? Lots of people will snatch up the chance to rent something at a low price (see example). But there are ways you can get around the "low rent or no rent" phase (I made that up, am I good or what?). A major thing that you could use for your advantage is that people will pay more if they're only staying there for short periods of time. An example is, you can fetch a room for a month for under 1,000 dollars if you rent per month, but if you stay in a hotel room for one night, it can easily cost 300 dollars. A third of the price, but a thirtieth of the time! So, instead of continuously renting out your cottage per month and only getting a little more than a thousand dollars, you can turn it into a B&B and make up to 150 dollars a day! But something more surprising: I did some research, and if you actually advertise the cottage instead of a B&B, you can make twice as much!
A cool perk that comes with the cottage package is that you'll able to brag to the Jones's about owning a cottage and a house! Don't let those Jones's push you around! Another perks towards owning a cottage on your property and renting it out is that you still only have to pay one mortgage! So you can make your regular payments, and then be able to add on the cottage's income and soon be mortgage free! Hopefully....

Can anyone tell me what the vida loca means?

We were up in Whytecliff Park, so I snapped a picture of this house.


Mmm-mmm! Finger lickin' gooood!'













But it ain't NOTHING compared to this baby!


I give you... BILL GATE'S HOUSE!

A little bit of a motivational post, I must say. Imagine being able to build regular sized houses on your dock. Wait, let me look at that dock. Make that a neighbourhood.

The House Who Bought Itself

Let me tell you a story about the house who bought itself. One day a boy named Paris (I'm the star of the story!) realized that he wanted to buy a house. But he was only 23! (I took an aging potion) He could not afford to make continuous payments to his mortgage, but following his own advice, had about 50,000 dollars saved up. So he went around looking for a nice house. He found the perfect one, and it cost 500,000 dollars. He quickly got a mortgage and payed his 50,000 dollar down-payment. But now he needed a way to pay the mortgage. He didn't feel the need to move out of his parent's house just yet (although they wanted him to) so he decided to rent the house out and stay with his parents. He put all the rent payments towards the mortgage, and pretty soon, he had a 500,000 dollar house that only cost him 50,000 dollars!
The end!
I have this dream to buy a house before I'm 17, but I need a way to do it. I know that I can't pay for the full house all at once, and paying off a mortgage is out of the question, so I devised this plan to help me do it. If you can't come up with the 10 percent down-payment, see if you can borrow from an angel investor (someone who will loan you money at little or no interest, usually family) and if you have a dream like that while you are young, you can ask a parent to buy the house for you.
Another similar plan like this is, if you already own a house and are paying that mortgage, you can get a second mortgage on a condo or another house and use that as a rental property.
So if one of these plans can work for you, you're well on your way to being on your way to being financially independent!

Kids Can Do It Too!

Did you know that people normally don't pay off their mortgages until they're almost retired? Eww! So what if you started earlier? Like, when you're a kid! I'm already saving for my first house, and have been for a few years! It's easier than you think...
Here are some steps to take to help you achieve a house by the time you're 15! (maybe later...)

• Save at least 50 percent of what you earn! You really don't need that newest skateboard if your old one is a month old. Toys can usually wait until birthdays and christmas.
• Babysit! Don't have enough time? Take your homework with you and do it while you babysit. Make sure you charge appropriate rates to keep the customers coming back!
• Once you turn 14 and are legally able to get a job, do it! You don't really need 2 months to relax. Put all of that money towards your Big Purchase and use your allowance to spend.
• In the end, if you can't afford to buy a house, then co-buy one with someone else. That way, it'll be a lot easier to pay off the house faster, but you'll still be a proud owner!

There you have it. Some people earn-to-own a house, and have it by the time they're 17! Just try really hard, save a lot, spend little, and you'll be an owner before your parents!

Mortgage Magic II

We were asked yet another question about mortgages that I'm sure would really help anyone who knew the answers. Now let's get ready to rumble!

Dear Munnybagz,
I was just wondering if you could tell me how to negotiate a better mortgage, because I am sick of always having to pay off interest instead of the base mortgage. Please help me!
Mad at Mortgage

Dear Mad,
Although you may hate your mortgage rate, you have to realize that mortgages have the lowest interest in comparison to all the other loans. But there are a few tricks and tips that can help you get the best deals.

• hunt around for mortgages at different banks or go to websites that compare mortgages.(such as mortgageshark.com)
• when you're talking to a bank about a mortgage and you're not sure whether or not you're getting the best rate, ask them what they're best rate is, because you found a bank that gives a very good mortgage rate.
• remember, banks always make money off your mortgage, no matter how little they charge. But the higher mortgage rate, the more they make, so if you tell them that another bank has 4.5 %, they will try to go better than that to get your business.

That should help you a little bit, Mad, and anyone else who wants a better rate. Stay tuned for our next episode, and send in your questions!

Munnybagz

Anonymous Strikes Again!

We're back in the action with another question, this on also asked by the so called "anonymous". Whether or not it's the same one, we have not yet found out.

Dear Munnybagz,
I have a question I have been trying to get an answer to with no success. Does it make sense to pay down my mortgage by making extra payments if I plan to sell the house in 5 years or less? I hope you can help.
Thanks,
Anonymous

Dear Anonymous,
Short answer no with an if, long answer yes with a but. Short answer first. You seriously should not pay extra on your mortgage if you have other higher interest debts. That would cost you more money than paying off your other debts. The long answer is yes. As long as you have extra money to put into a debt, and you are on track with all other debts, always pay off as much as you can. Because if you pay off your mortgage payments, thus getting rid of the interest, whatever you put into your mortgage goes directly into the debt, not interest. That way, (if you've read my How to Pay a Mortgage post, you'll know*) if you can pay an entire years worth of mortgage payments when you don't have to, you just cut a year off your mortgage. Even if you have only 5 years or one year left in the house, you'll get more money once you sell it and finish the mortgage up. Hope this answers your question.
Munnybagz

*Turn 8,000 Dollars into 20,000 Dollars!

Turn 8,000 Dollars Into 20,000 Dollars!

So here we are again with John. Now John has just purchased a new house. He wants to pay off the mortgage quickly and effectively. What should he do? First off, check in advance to see how much money a year you would be able to spare on your mortgage. Then, according to that, see what plan you could handle. Remember, the fewer years possible, the better! Next, take out the mortgage for the house and purchase it. But before you buy a house, ALWAYS have a down payment of at least 10 percent. The more the merrier! But anyways, John manages to pay off 20,000 dollars a year. But unfortunately, mortgages accumulate so much interest that only 8,000 of that goes into the mortgage. The other 12,000 pays off his interest. But, lucky John wins 8,000 dollars in a lottery! Lucky John! He decides that money should go into his mortgage, although he’s already payed his 20,000 dollars. But wait- John has already payed off all his interest! That means that 8,000 dollars goes into paying off his house! So John just saved himself an entire year of mortgage tyrrany! So by managing to pay off that 8,000 dollars in the same year he already payed his interest, he just saved himself from paying 20,000 dollars in another year! Just call me Mr. Magician! So don’t buy that used car that you’ve been eyeing. Do yourself a favour, and buy a 20,000 dollar car instead when your mortgage is gone!

Real Estate With $500,000

If you are ready to buy a house without needing a mortgage, then this is for you! If you aren’t, then refer to my other articles. A good reason to invest in real estate is that you can double your money in less than 5 years! Then buy a new house and sell it, then buy 1 or 2 houses and sell them, then eventually move on to new and bigger things such as Mansions, summer homes, apartment buidlings, and eventually even golf courses! The cool thing about investing in an apartment building is that you generate income while you’re letting your land become more valuable! If you think that this is a slow and tedious process, and just doesn’t pay off enough, you just have to play your cards right. Donald Trump did, and it’s thanks to real estate that he’s a billionaire! Also, to save money, you could constantly move and live in your current investment house. A good way to pick a good investment spot is to look for places that were residential, turned commercial, and are starting to or about to develop into high-rises.

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!