Financial independence – that is why people most often invest in income property. If I buy a building in Anchorage that rents for about $3,900 a month – and I pay a mortgage of $1,800 and average utilities of $550. Then in a month when my property doesn’t need repair – and is fully leased up – I get to pocket that $1,550 a month as income. But when I pay that mortgage off – my monthly income potential goes up. It will likely be over $3,000 a month.
How do you manage rental property? Well our friends Brandon & Heather of Bigger Pockets fame wrote a great book on it – I buy it for all my investment property clients – it is just that good. Want a free copy? Fill out the contact information and become a client! Just want to buy yourself a copy for now? Go get it here: The Book on Managing Rental Properties
What happens down the line – well nobody knows the future – but here are some conventional assumptions:
If we experience 2.5% annual increases in expenses and values (so rents go up, property values go up, taxes go up, utilities go up, etc.).
After 30 years – my debt on the property would be paid off and at zero.
My property value will go from: $375,000 to $786,500
So my taxes go up, insurance goes up, utilities go up, and rents go up. When that debt is paid off – I could be looking at $5747 a month in cash-flow. Now if I have 4 properties like that – I’d be looking at $20,000 a month in cash flow!
There are many other ways to slice this up. Pay your properties off faster – invest in more than 4 similar buildings – etc. But I think you get the idea. That cash flow – is also with owning free and clear four buildings for income that total would sell for over $3 million dollars. Not a bad nest egg. Sell one off for that sailboat you want in Hawai’i, etc. you get the idea.
We will keep you updated