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|Topic subject||RE: Investing Strategy, Using equity|
196, RE: Investing Strategy, Using equity|
Posted by ZeroGCreative, Tue Jun-05-07 12:33 PM
A common misconception is that having a paid off house is good. Well, I guess but then that $300,000 is earning you ZERO return! It is just like having a savings account that pays 0% interest. So why try to pay off your mortgage??
Instead maximize your return on your equity. If you re-fiance and cash out 90% of your equity...you ALWAYS want to leave 10% equity in your home to account for price downturns if you ever need to sell. As long as your return on investment is greater than the interest rate on your mortgage, then you are making money! Investing in rental property (not a second home...again no return on the equity in it!) is a great way to make high return on your investment. The cash flow you receive every month is passive income...you don't have to work for it...and it will 9 times out of 10 be a better cash on cash return than any IRA, mutual fund, or savings account.
Remember, real estate is a tangible assest (your home is NOT an assest...it makes you no money therefore it is a liability-Robert Kiyosaki). The stock market can crash...and you can loose EVERYTHING!!!!!! People will ALWAYS need a place to live, and there is only so much land. Real estate prices can go up and down, but if you stay in for the long term, you will succeed.
Just like everything else, educate yourself. If you are interested in commercial real estate. Scott Scheel has an amazing 4 day academy where you learn an enormous amount!! Work with a real estate agent who is an investor THEMSELVES! And read the books that are out there!
I speak from experience!!