Buying Houses as an Investment

Buying Houses as an Investment

The house you live in is one of the biggest investments

that you will make. But, the more you learn about

real estate and how it works, the more you might want to

invest in other houses purely for prooft. Unless you get a

really bad deal on the price of property, you can’t really

go wrong buying houses.

Land has continued to increase

in value for the last

fifteen hundred years and it

will continue to do so.

If you purchase a

house for $150,000 and hold

onto it for five years, in most cases, it will be worth at least

$200,000. That is an increase of $10,000 a year. Even if

you have bad credit, your payments will be around $1,000

a month. You could rent it for perhaps $800 a month.

I know what you are thinking. “That’s a horrible

investment that will cost you $200 every month. How can

that be good?” This is another example of not thinking like

the wealthy. You have to look at all the pieces.

Each year, you will put $2,400 into the house. Your

renter will pay the rest of the mortgage payment, but it will

cost you that much. However, the value of the house has

gone up $10,000 over the same time period. That is actually

a profit of $7,600, a 400% return on your money. That

is not including the extra tax deductions that you will get.

It is not a $200 a month loss. It is a 400% return.

If you are still renting that house in fi ve to ten years,

the rent will have increased to $1,200 a month and then you

have a profi t of $200 a month beyond the other increase.

In ten years, that house will be worth at least

$270,000, which will give you a profit of $14,000 a year.

Not too bad for a small investment. Now imagine that you

have four or five houses, all doing the same thing.

You need a credit score of 660 or higher and you

will have to put 5% to 10% down, so you will need a maximum

of $15,000 to get started. If you do not have that,

consider getting some partners. Save your seed money

until you have enough. Do whatever you need to do in

order to get started.

Another type of investment is what is called “flipping”

houses. Someone might buy a house for $150,000

and then resell it at a higher price. It might be a fixer upper

or the owner might have been behind in payments and just

needed to get out quickly. Most times, they have a little

equity in their house but they will lose it if it is repossessed,

so they will make a great deal for the right buyer.

If you decide to invest in those kinds of deals, you

can make a quick $10,000 per house. Be sure to include

all expenses like your real estate costs and loan and administrative

costs, but when you do it right, you will average

around $10,000 profit.

You can do this with the house you live in. Buy a

fixer upper, fix it up, move in and put it on the market. You

can live in it until it sells. If it does not sell right away,

it’s no big deal because the house increases in value every

month that goes by. You are using the bank’s money plus

you get the tax deduction. Once it sells, do the same thing

again. Then you can start buying more than one at a time.

In a relatively short period, you build up a tremendous

amount of value in the properties that you own.

The important thing to realize is that you are no

longer thinking in terms of just getting by. Your house is

not just an expense that you pay every month so that you

have a place to live. It is an investment that can make

you very wealthy. That is how the rich think of everything

they own. The more you learn to think that way, the

wealthier you will become.

 
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