If I could show you in 10 minutes or less how to double your investment in five years is that something that you would be interested in?
With today’s low interest rates it can be possible.
Traditionally investors use cash flow to determine a rental property’s value, but with today’s rates just using Cash Flow potential to determine its value may be a mistake. You need to take into consideration the potential return as an investment.
Cash Flow is basically the money you are left with once mortgage payments, property taxes and maintenance expenses are paid. Some rental investors take this amount and divide it by the amount of their investment to calculate their return. For example, if you make a down payment of $150,000 on a rental property and at the end of the first year you have $1,500 of rental income left over after paying all expenses including your mortgage payments, your investment return using a Cash Flow analysis would be 1% ($1,500/$150,000). It’s no wonder that investors who value income properties this way are not buying up properties right now.
But there is a big piece of the investment return missing, and it is a by-product of our current low interest rate environment.
Simply put, the low interest rates means that the payments are lower which means that more of each rent cheque goes directly towards paying off the principal of the mortgage. This allows you to pay off the mortgage more quickly and build more equity in your investment property.
If you would like more information about how to double your investment in five years please call me direct at 519-328-4963
Julie Jenkins Sales Representative
EXIT Realty Twin Bridges Brokerage
Direct email: Julie@exitsarnia.com