Quote:
Originally Posted by OneHungLo
You calculated wrong and you do not buy RE with cash.
Here's a super fast example with obvious things left out but it should put you in the right frame of mind.
EXP 1: You buy one house for $100,000. It rents out at 1k a month = $12,000 a year.
in 20 years | $12,000 x 20 years = $240,000 + (lets say the house doubled in value) $200,000 + $240,000 = you made $440,000 on your $100,000 investment.
EXP 2: You take your $100,000 and buy 10 houses putting down $10,000 on each house. They rent our for 1k each but most goes towards paying down mortgage. After 20 yrs, mortgages are paid off and (lets say they are now renting out for $2,000 a month) $24,000 in rental income. Now you have 10 houses worth $200,000 a piece = $2,000,000 with $24,000 a month in income.
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I know several people that did it this way. Did it when they where around 30 with big mortgages and stopped working. They could live from the rentals and pay some off (not needed to pay them all off, just pay the interest).
But buying for 100.000 won't work anymore. Houses have doubled in price in 5 years. You need at least 200.000 and the rent will be around 1000 - 1500 a month.
In Holland you have to finance 30% yourself. But it still is possible to get it financed and have enough money to live from and pay the mortgage. But sometimes it is not needed to pay off the mortgage and the interest is around 3 - 5%! After 30 years you take another mortgage, or pay of the house with cash. In Holland you don't pay taxes on rental income and cause it is all debts (mortgages) also no wealth tax.
PS, those houses are always occupied cause there is a shortage of houses in Holland since 100 years. And looks like they aren't even able to build enough for new people coming in.