Have you been contemplating a leap into the real estate market? Are you worried it will be too expensive?
Actually, owning real estate can cost as little as $100 a week if you employ several smart strategies. Consider the following which can help you reduce the cost of owning real estate:
- Use the equity in your current home as security for your next property. You could use the equity in your home as collateral or you could utilize a home line of credit. While this can be a great strategy for buying your rental property, you will be putting your own home at risk should you be unable to make the payments, so you want to choose a home loan you are sure you can afford, even if your circumstances change.
- Hire a mortgage broker. Of course, using equity in your personal home is not the only way to go. Utilize a mortgage broker to help you find the best loan with the lowest possible interest rate. (Use a home loan calculator to see how much even a percentage difference in interest can save you over the course of the loan.) Not only can mortgage brokers save you money, but they are available at no charge to the consumer, and they can save you time because you don’t have to do all of the legwork yourself.
- Utilize tax deductions. There are many tax deductions you can take advantage of as a property owner. Many of these such as interest you have paid on the home loan for the property during the year as well as ordinary and necessary repairs, for instance, can help lower your overall cost of investing in property. (Make sure to consult an accountant to verify all deductions are legal.)
- Before you buy, study the market. Ideally the rent you collect will be enough to cover your monthly home loan payment. Make sure to choose a property in an area that is likely to appreciate in value. Then, every few years, you can raise the rent, which will give you additional money beyond the mortgage payment because your mortgage payment will likely remain stagnant while rent increases.
- Keep an eye on the future. Would you like to own several properties? As your first property gains equity, consider using that equity to buy your next property. Follow the same strategies utilizing tax deductions, buying in an up and coming area, and making sure the monthly rent you charge is as much as, or exceeds, your monthly mortgage, and you are on your way to building wealth.
Many people stay out of the real estate market because they believe it is too expensive. While buying real estate may require money upfront, over the years, as the house appreciates and you collect higher rents and buy more properties, you can keep reducing your monthly costs while increasing your net worth. What is stopping you?