Buying an Investment Property to Earn Residual Income

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I was having a conversation recently with a client about saving money so that our kids could someday attend college. I have a one-and-a-half-year-old daughter, so I know that for those of you out there starting families, future college tuition is something that’s always on your mind. Not only do I have my daughter, but I also have a 19-year old son who’s actually there right now. I’m paying some hefty bills covering things like rent, food, books, insurance, and a lot of other unexpected fees I never imagined I would have to pay.

These things got me thinking about how others like me can proactively save money for their children’s future. One important way I want to talk about today is buying an investment property. With barely any upfront costs, you can let it sit there and make money for you. Let me outline a scenario to explain.

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You can let it sit there and make money for you.

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Right now we have a great property in the middle of Mandeville that’s going to be listed at about $130,000. Imagine you bought this as your investment property. Mandeville is very attractive for rental properties because you can make up to $1,200 a month. For a 15-year note (for which rates are at 2.8%) on $130,000 price tag, you would be looking at a note of $900 a month. The good news is you don’t have to pay that note - your renter will have to pay it for you. If the rent is $1,200, that means you would stand to make $300 a month for doing absolutely nothing. $300 a month then equates to $3,600 a year. If you let that sum sit there and ride for 15 years, you’ll end up earning a savings of $54,000.

After 15 years, you’ll have a paid-off investment property that’s still bringing in money. In fact, 15 years from now, it will probably have increased to $1,500 or $1,600 a month. Wouldn’t it be great to wake up 15 years from now and have the funds on the side for your kids’ college education? Did that just blow your mind? Well it should, because all you had to do was put up that initial down payment and all the other funds were paid by someone else. How’s that for building wealth?

I have plenty more information regarding wealth-building strategies I would love to share with you guys. Feel free to call or email me anytime.