Wake-Up Money, Secrets to Investing

Most people think of investment property only in terms of monthly cash flow, but that’s just one piece of the puzzle. Even with $0 monthly cash flow, your investment is still working for you in multiple ways:

1. Cash Flow -$0/$65,000 = 0% Return On Investment

2. Leverage -You own $275k of real estate for a $61,875 cash investment

3. Debt Reduction -$2,256 in principal reduction the first year. In essence the tenant is buying you the house and giving it to you at the end of the loan. $2,256/$61,875 = 3.65% Return On Investment

4. Tax Savings -About $8k/year in depreciation.

5. Appreciation -If this house goes up 5% in value this year, it will increase by $13,750. $13,750/$61,875 = 22.22% Return On Investment

$275,000Price
$61,87520% down payment + closing costs
$220,000Loan @ 6.95%; 30-year; fixed rate
$1,456Monthly principal; and interest payments
$294Monthly taxes and insurance payments
$150Monthly reserve for maintenance/repairs
$1,900Monthly rental income
$1,900Total monthly expenses
$0Monthly cash flow

Possible Total Return on Initial Investment (after first year):

0.00%From Cash Flow
3.65%From Principal Reduction
22.22%From Appreciation
25.87%Total Return on Investment

When this property is free and clear, you will have nearly $22,800.00 a year in “Wake-up” money. Of course, by then the rent (and the “Wake-Up” money) will probably be a lot higher, as will the property’s value.

Wake-Up Money, Secrets to Investing

Possible Total Return on Initial Investment (after first year):

When this property is free and clear, you will have nearly $22,800.00 a year in “Wake-up” money. Of course, by then the rent (and the “Wake-Up” money) will probably be a lot higher, as will the property’s value.

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Wake-Up Money, Secrets to Investing​​​​

​Possible Total Return on Initial Investment (after first year):​

​When this property is free and clear, you will have nearly $22,800.00 a year in “Wake-up” money. Of course, by then the rent (and the “Wake-Up” money) will probably be a lot higher, as will the property’s value.

Get help with all of your real estate needs!

Home

Account

Wake-Up Money, Secrets to Investing

Possible Total Return on Initial Investment (after first year):

When this property is free and clear, you will have nearly $22,800.00 a year in “Wake-up” money. Of course, by then the rent (and the “Wake-Up” money) will probably be a lot higher, as will the property’s value.