3 Ways To Make Money in Real Estate








1. Cash Flow








2. Appreciation








3. Principle Reduction





3. Principle Reduction


Mortgage Balance Down▼ - Equity Up▲

Paying off your mortgage is a great way to build equity.  It is a normal part of the lending process, and a significant contribution to the concept of leveraging your investment.

Example
Say you purchased a $800,000 fourplex, putting 25% down at a 4% interest rate.  Your monthly mortgage payment (principle + interest) would be $2,865.

At the beginning, your mortgage balance is $600,000. You are paying $865 a month towards principle, and $2,000 a month towards interest. The principle payments are very small at the beginning.  The lender wants to maximize their interest collection.  However, they gradually increase and the ratio changes.

In this example, by year 5, you will have reduced your principle balance down to $554,067.

Which means you have accumulated $45,933 in equity in those 5 years.  If you sold the property then, that money would go into your pocket (less closing costs, etc.)


Let Us Help


Feel free to contact us to get started on your path to real estate investing success.

We'll be glad to answer any questions you may have about residential income properties,

and guide you every step of the way:



(562) 208-9818

info@re124.com

EZ Contact Us Form



We find good income properties that meet the investment needs of our clients