QUOTE (ruddens @ Jan 6 2009, 12:45 PM) Hi,
I`m just building an investment plan, and my wish is to eventually invest in real estate on a full time basis. However, as I`m developing my plan, I just don`t see how real estate brings money in my pocket to pay my personal bills, groceries, and normal life expenses. It seems I can only make money with equity and when selling after a few years. Even when using OPM, spliting profit with other investors, there`s almost nothing left to survive on...! Until it`s sold...
Is that all there is to it? How do people make a living out of real estate if it doesn`t bring regular income?
Thanks
Ruddens
Not necessarily...As you pay off your debt with every mortgage payment, your equity does increase...provided the values dont change in the wrong direction...but overtime (years) values do go up, speaking statistically. But something else to keep in mind, as you pay down your debt, when it comes time to renew your mortgage which may be 5 years down the road, you will be negotiating with a lower debt amount and can possibly see a lower monthly payment, provided interest rates dont climb to high...so if the cashflow is what your looking for and your willing to wait a few years to see it improve, then pay down as much of the debt with positive cashflow and increase your rents every year, then you should see some decent cashflow down the road.
But this has alot to do with how much your LTV is, what your cashflow is like when you started, how much of that cash you put back to the mortgage and what the interest rates are like when you go to renew...if you planned well, youll start to see some appreciable cashflow down the road. Think long term...
I`m just building an investment plan, and my wish is to eventually invest in real estate on a full time basis. However, as I`m developing my plan, I just don`t see how real estate brings money in my pocket to pay my personal bills, groceries, and normal life expenses. It seems I can only make money with equity and when selling after a few years. Even when using OPM, spliting profit with other investors, there`s almost nothing left to survive on...! Until it`s sold...
Is that all there is to it? How do people make a living out of real estate if it doesn`t bring regular income?
Thanks
Ruddens
Not necessarily...As you pay off your debt with every mortgage payment, your equity does increase...provided the values dont change in the wrong direction...but overtime (years) values do go up, speaking statistically. But something else to keep in mind, as you pay down your debt, when it comes time to renew your mortgage which may be 5 years down the road, you will be negotiating with a lower debt amount and can possibly see a lower monthly payment, provided interest rates dont climb to high...so if the cashflow is what your looking for and your willing to wait a few years to see it improve, then pay down as much of the debt with positive cashflow and increase your rents every year, then you should see some decent cashflow down the road.
But this has alot to do with how much your LTV is, what your cashflow is like when you started, how much of that cash you put back to the mortgage and what the interest rates are like when you go to renew...if you planned well, youll start to see some appreciable cashflow down the road. Think long term...