A bi-weekly mortgage is a mortgage payment plan where payments are made every two weeks, as opposed to the more traditional monthly payment plan. Making mortgage payments every two weeks, as opposed to monthly, will result in the equivalent of one additional monthly payment being made each year.
This extra payment is applied toward the principal balance of the mortgage, and will lead to substantial interest savings over the life of a long-term mortgage.
When a bi-weekly payment plan is set up, most mortgage servicing companies simply hold the first half of the monthly payment until the second half arrives and then make the full monthly payment. If a simple interest bi-weekly mortgage plan can be set up, each payment received is immediately applied toward the principal balance of the mortgage leading to additional interest savings.
Converting an existing mortgage to a bi-weekly plan usually carries some fees. A self-disciplined borrower can gain the same benefits of a bi-weekly plan by making one additional mortgage payment each year, or by paying an extra amount each month equal to 1/12 of the scheduled monthly payment.
Showing posts with label Paydown Principal. Show all posts
Showing posts with label Paydown Principal. Show all posts
Sunday, June 29, 2014
Saturday, June 21, 2014
The Paydown Investment Objective
Paydown is when a mortgage borrower pays the principal and interest of a mortgage. In doing so, the borrower is paying down his or her debt.
Paydown also refers to an investment objective when a mortgage borrower pays the principal and interest of a mortgage from income received from a tenant. This is considered another source of income because it is money the borrower would otherwise have to pay.
Paying down the principal and interest increases the borrowers equity and can increase capital gains and income if sold or refinanced.
Investors who combine the paydown investment objective with other objectives and strategies can exponentially increase the return on their investment.
For more information about real estate investing visit us online at Carlisle Mitchell - Real Estate Tips for Investors
Paydown also refers to an investment objective when a mortgage borrower pays the principal and interest of a mortgage from income received from a tenant. This is considered another source of income because it is money the borrower would otherwise have to pay.
Paying down the principal and interest increases the borrowers equity and can increase capital gains and income if sold or refinanced.
Investors who combine the paydown investment objective with other objectives and strategies can exponentially increase the return on their investment.
For more information about real estate investing visit us online at Carlisle Mitchell - Real Estate Tips for Investors
Saturday, June 7, 2014
Multi-Family Investment Property
Multi-Family Investment Property is a type of home or building with multiple units owned by one or more parties. Condo buildings and duplexes can be considered multi-family residences; but with a duplex, both the property and the land are recorded on one deed. Whereas with a condo, the owners only own their individual units, not the common space or land, and each have their own deed.
Multi unit residential apartment buildings include multi family investment property of five or more residential units. This type of property can also be owner occupied (although not as common) or all units can be occupied by tenants.
Strategies for investing in multi family investment properties include buying properties at prices below market value and then leasing to tenants.
The investor can rent, refinance or sell for rental income, appreciation, capital gains and tax deductions, depending on the investors goals and objectives.
Multi unit residential apartment buildings include multi family investment property of five or more residential units. This type of property can also be owner occupied (although not as common) or all units can be occupied by tenants.
Strategies for investing in multi family investment properties include buying properties at prices below market value and then leasing to tenants.
The investor can rent, refinance or sell for rental income, appreciation, capital gains and tax deductions, depending on the investors goals and objectives.
Thursday, May 23, 2013
8-Ways to Make Money On Investment Properties
The key to building true wealth in real estate is through buying and holding. A good tenant can create wealth for you by paying for the mortgage, insurance, taxes and monthly fees through their rental payment to you. In addition, you have an asset leveraged for a fraction of the value.
For example, let's say you purchased a condo at $150,000 for $15,000 down payment. If it grows at 5 percent per year ($7,500 first year, etc.) you're making more than 50 percent on the money you invested -- which beats most traditional investments.
Real estate investing allows investors several ways to make and/or save money that other investment tools will never allow or have the ability to provide.
Successful investors don't just look at appreciation to make money. Here's how you can build wealth through your real estate investing:
1) Positive cash flow
This is simply what it sounds like -- the rent covers the mortgage, taxes, insurance, fees, etc., and once all that's paid, you have money left over at the end of the month. A wise investor will also have enough money in reserves to cover all these expenses for a few months in case the property goes vacant.
2) Pay down in principal
As the mortgage shrinks from the mortgage payments, your equity grows (and so does your net worth). This is one of the most powerful means of wealth growth -- using OPM (other people's money) to build your net worth. The tenant is providing the investor with hundreds or thousands of dollars per month to pay off debt, which turns into equity for the landlord.
3) Improvements
This is the fixer-upper that most people think about when investing in real estate. Purchase a property for $50,000, put in another $25,000, and voila, the house is now worth $125,000 ($50,000 more than the initial investment).
4) Wholesale purchases
The most effective way to build net worth and equity is to buy a house for a bargain price. These properties would be the pre-foreclosure, foreclosure, tax sales, etc., where the investor buys the property well below market price. In essence, you make your money when you buy the house at such a low rate.
5) Tax deductions
One of the greatest benefits about real estate investing is all the tax breaks allowed for these type investments. Uncle Sam allows many tax deductions, tax credits and other government-sponsored programs connected with real estate investing that cut the investor's tax bill, thus, increasing the bottom line and equity growth.
6) Asset Management
Many novice real estate investors lose money simply by not managing the asset wisely. For instance, painting properties before the wood is actually peeking through will keep the asset in good shape, seal the wood, and protect it from more expensive damage. Managing the asset is just as important as buying smart and cash flow. The real estate investment is a commodity, not a money machine, and must be managed and protected to maintain future growth potential.
7) Value appreciation
As your property increases in value, so does your wealth. This is the old fashioned principle of buy and wait. Buy at today's prices and with time, your asset will grow in value due to appreciation. In addition, your equity will grow along with the amortization principle mentioned above.
8) Rent appreciation
As the cost of living increases, so, too, should your rent cash flow. Increasing your rental income per month by 5 percent could result in hundreds of dollars of cash flow per year -- year after year.
For example, let's say you purchased a condo at $150,000 for $15,000 down payment. If it grows at 5 percent per year ($7,500 first year, etc.) you're making more than 50 percent on the money you invested -- which beats most traditional investments.
Real estate investing allows investors several ways to make and/or save money that other investment tools will never allow or have the ability to provide.
Successful investors don't just look at appreciation to make money. Here's how you can build wealth through your real estate investing:
1) Positive cash flow
This is simply what it sounds like -- the rent covers the mortgage, taxes, insurance, fees, etc., and once all that's paid, you have money left over at the end of the month. A wise investor will also have enough money in reserves to cover all these expenses for a few months in case the property goes vacant.
2) Pay down in principal
As the mortgage shrinks from the mortgage payments, your equity grows (and so does your net worth). This is one of the most powerful means of wealth growth -- using OPM (other people's money) to build your net worth. The tenant is providing the investor with hundreds or thousands of dollars per month to pay off debt, which turns into equity for the landlord.
3) Improvements
This is the fixer-upper that most people think about when investing in real estate. Purchase a property for $50,000, put in another $25,000, and voila, the house is now worth $125,000 ($50,000 more than the initial investment).
4) Wholesale purchases
The most effective way to build net worth and equity is to buy a house for a bargain price. These properties would be the pre-foreclosure, foreclosure, tax sales, etc., where the investor buys the property well below market price. In essence, you make your money when you buy the house at such a low rate.
5) Tax deductions
One of the greatest benefits about real estate investing is all the tax breaks allowed for these type investments. Uncle Sam allows many tax deductions, tax credits and other government-sponsored programs connected with real estate investing that cut the investor's tax bill, thus, increasing the bottom line and equity growth.
6) Asset Management
Many novice real estate investors lose money simply by not managing the asset wisely. For instance, painting properties before the wood is actually peeking through will keep the asset in good shape, seal the wood, and protect it from more expensive damage. Managing the asset is just as important as buying smart and cash flow. The real estate investment is a commodity, not a money machine, and must be managed and protected to maintain future growth potential.
7) Value appreciation
As your property increases in value, so does your wealth. This is the old fashioned principle of buy and wait. Buy at today's prices and with time, your asset will grow in value due to appreciation. In addition, your equity will grow along with the amortization principle mentioned above.
8) Rent appreciation
As the cost of living increases, so, too, should your rent cash flow. Increasing your rental income per month by 5 percent could result in hundreds of dollars of cash flow per year -- year after year.
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