Wednesday, March 28, 2007

Private Mortgage Investing Vs. Rental Income

Let’s imagine that you bought a house and you are renting it to tenants for $1000 per month. If the house cost you $100,000, you are getting a return on investment (ROI) of 12%. This sounds great, but it is not the whole picture.

In real life, if you bought either house, where would most of your rental income go? You would be spending a good portion of the $1000 a month. It would go not only to the bank in the form of a mortgage payment, but it would also go into the maintenance of the property.

Every time a toilet leaks or a hot water heater fails, part of your interest is eaten up. Yes, you are building equity, but at a very slow rate. In the meantime, you are dealing with tenants.

It seems to me that the bank has it pretty good. They just collect the mortgage every month. They are not in charge of toilets and tenants. Even if a property goes into foreclosure, they have attorneys to take care of it. They make money while you do the work.
How would you like to be the bank? That is what private mortgage investing is all about. You get the monthly payments and the real estate investor deals with everything.

To learn more, buy Private Mortgage Investing.

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