As I mentioned in one posting, one of the areas I’m engaged
in for income generation and eventual overall wealth is an investment property.
It is merely one prong of my overall
investment strategy, which includes dividend growth investing and retirement
investment accounts. Frankly, it is my
least favorite and one that I’m always anxious about.
I currently own, or at least like to call myself that as the
bank truly owns it, one investment property, which is a single family home. This is a hands off investment property, as
the house is located in another state and I utilize a property manager at the
moment. I purchased the house right
before the housing crash, so my interest rate is horrible in comparison to what
is available now. Luckily for me, the
home is in a great market and has never sat idle for any length of time. However, I would still like to refinance soon,
if it would be practical with a lower rate and substantially lowering my
monthly payment.
Breakdown:
Loan outstanding – approximately $130,000
Zillow estimate – approximately $175,000
Equity – + $45,000 (Although
I’m not really interested in equity value as this can change dramatically over
time)
Loan payment - $845
Rent income - $1300 minus management fees of $130 = $1170
Positive cash flow = $325 monthly
The plan for the property is to continue paying down
principal with any excess income generated from the property, which is
typically $325 monthly. I would like to
refinance the house to lower my monthly payment, which will increase my
income. However, I’ve heard it is more
difficult to refinance a rental property, so I’ve been hesitant. In addition, I plan on raising the rent for
the next tenant, as the amount has been stale for the past three years and
estimates for rent indicate $1450 as a fair value.
To date, i do not own any investment property, but I am not against it. For now the cleanest and simplest form of investment for me comes from stocks but I have been reading among many dividend bloggers about their real estate investment portfolio too. gets me thinking. Thanks for sharing.
ReplyDeleteThanks for stopping by! It's definitely the most worrisome for me, as the potential is there for you to literally come out of pocket I.e. no renters, bad renters, repairs etc. However, you can make some decent money in the long term with them. I'm sticking to one for the time being and may add another down the road.
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