In order to achieve true financial wealth, you need have an investor mindset. Don’t think that your current income and savings plan will be enough to build true wealth. One way to build wealth in any market is to find properties that are a good value that can be rented for a positive cash flow. It is important to remember you have to start somewhere with your investment plan. One strategy that worked for me when I was younger was to buy and finance a house that needed some cosmetics and/or upgrades, move into it and do those things, and then after living in it for a while I would find another house and rent the first home at a profit.
Turning your personal residence into a rental has its advantages because when you buy an investment property you usually have to put 20% or more down but you can buy as an owner occupant with little or no money down as well as get a better interest rate in most cases than the rates offered to investors.
Over time as rents go up your principle and interest payments remain the same and you will get more and more cash flow out of the property the longer you hold it. You also get to take advantage of depreciation which shelters some of the income from taxes during your ownership.
Leverage is the amount of money you can borrow on an investment property, and allows you to make money off money you borrowed from a bank or individual. Appreciation is the concept of land and property values going up over time. Leverage and appreciation work together over time, helping you build equity in the property, as the years go by values should go up and the mortgage balance will go down.
To learn more about how you too can invest in income producing property, give me a call at (850) 453-9220.