Becoming a Landlord
Another way to invest is to buy a smaller second property using a home equity loan for your down payment. Condos are a good opportunity, as well as homes in adult communities where carrying costs tend to be more predictable.
If the rental income covers the costs of financing, taxes and association fees, appreciation of the property and depreciation on your income tax will work in your favor.
A $25,000 down payment on a $100,000 property that appreciates 10% annually would be worth $68,000 after taxes if sold 5 years later– for a 22% return on investment.
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