Sharing Daily Discoveries About Personal Finance And Business Topics

Mortgages For Investments

A person was telling me that they recently invested in some real estate worth a little over $100,000 with the intent to rent the place out to get some extra income. He couldn’t afford to pay everything all cash and so he opted to get a mortgage. All in all, it worked out to something like since the mortgage was about $500 a month, if he rented the place for like $900 he would essentially earn less than $400 a month before tax if we include all the other fees of owning a property.

The one thing that kept getting stuck in my mind was how much money you lose in a year as a result of having to pay the mortgage fees. He was probably about $50,000 short from being able to simply buying it outright with cash. In many ways it is really risky too such as if you don’t have a tenant for whatever reason it could end up costing you money. I know for a home in general for personal use I am inclined to say if you can’t afford it outright then maybe it’s not your time to own an expensive house. For investments like this though, maybe it’s not too bad of an idea as technically like in this case you are making money as long as you have everything setup to do so.




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