Even in today’s uncertain climate, a hands-on real estate investor can make money with smaller properties that are easy to acquire and manage.
Here are some suggestions to get started:
- Rent out a part of your own home for $400 a month and use that money every month to pay down mortgage principal. Shaving 10 years from a $350,000, 30-year mortgage will reduce total payments by more than $165,000. And you will be able to write off all your costs on your income taxes, including depreciation on the unit, up to your actual rental income.
- If buying a single family home, make sure you can put 10 percent down and rent the property for more than your monthly payment, interest, taxes, insurance, and a $200 expense budget. Low-balling a foreclosed home owned by a lender is one way to find such a property.
- Consider buying a two-family home, where you’ll make nearly twice as much in rent for a property costing little or no more than a single family.
Source: The Wall Street Journal, David Crook (01/10/07)