Duplex Insurance Vancouver
Duplexes - One Of The Greatest Investments You Are Able To Make
When it comes to real estate investing, most individuals will gravitate towards a single family home. But did you know that buying a duplex or a tri-plex is a much better investment? Let's look at the three most important things in real estate investing. Cash flow, Appreciating and Value.
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As anyone knows in property, the goal is for positive cash flow; otherwise you own an investment that costs you money on a monthly basis. Positive cash flow is simply defined as cash left over after paying for your mortgage, property taxes, insurance, and any monthly utilities and repairs.
A residence is a money pit that can cost you money in the method of the mortgage principal, interest, taxes and insurance. Add to the regular maintenance and repairs and after everything is said and done, the only real investment worth a house really offers is appreciation and that's speculative depending on your geographical area. Not all markets have rising values all the time and property values could be effected by plant closings, layoffs, etc.. For many practical purposes, a residential property, a "home" doesn't fall in line with the true spirit of real estate investment, which is property the will cause income-producing "positive" cash stream. Really, single family residential home used as a home has the opposite effect and causes outgoing cash flow. . .thus, the "money pit".
The smartest way to invest in residential property and still generate some kind of "positive cash flow" is to purchase a duplex, live in 1 side and let the other. Many times the rent income coming in from another side can nearly cover the mortgage payment of the full property supplying almost free housing to the proprietor. The renters on the opposite side are not only paying your mortgage, they're helping you build equity in your property. This equity will even increase over time with appreciation, providing two sources of wealth building: one from money flow pay-down of this mortgage and the other, land value increase through natural appreciation.
The amount of money you would usually spend on a single family home mortgage payment (PITI) can be saved, in whole or in part, as a down payment for another duplex throughout the time you reside in your property.
The title of the game is to buy a duplex, live in half, let the other half out and save for the next duplex. When you have enough money, move out of this duplex, then rent the unit and continue into the next duplex and then repeat the procedure by leasing another half out. This way you could have 3 sources of earnings working for you: income from unit A and B at the initial duplex and income from unit B at the next. Now you have real estate working for you and you are on your way to serious income producing cash flow.
The only real downside to the project is you will have to live beside your tenant for a period of time. The upstroke is it gives you a taste of property direction without burning more than you can reasonably weigh. Indeed, this very notion is the way many property concessions are birthed.
Not lots of people think about this angle when they are searching for a house and it's worth careful thought and serious thought. You've got two options: The money pit or income producing property. It is a choice you will need to make.
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