subject: Putting Money Towards Property [print this page] What is real estate? Why would you want to put any money towards a property and how can it make you more money?
Real estate is a term used to define several different things. It includes land, buildings, fences, wells, improvements made to the land, and fixed improvements that are on the land and cannot be moved.
It basically refers to the land and everything on the land while real property refers to the ownership of the land and any structures on it. Such as; trees, minerals, interest on the land, benefits of the land, and any inherent rights that go along with it.
Investing in real estate has become pretty popular in the last fifty years or so and is a lot more common than it used to be. People who are not in the business think that it can be simple but it is really a lot more complicated than they think.
You can buy a property and rent it out to someone that you have interviewed, performed a background check on, and trust to live in your house. Using their monthly payments that they give you will not go right into your pockets if there is still a mortgage on the house.
It typically takes about thirty years to pay off a mortgage on a home but can be done sooner if you sign a shorter contract and promise to pay more every month to keep the interest rate down. So if the bank still owns the house technically, then you still have to pay them every month.
Usually landlords will charge enough money to their tenants to cover the mortgage payment every month and to cover the utilities that they use. Sometimes a landlord will charge a little bit higher than that so they can make a small profit every month off of their tenants.
The majority of landlords will keep the price pretty close to what they owe on the mortgage and any other charges they have on the home. That way people will be willing to rent it from them instead of just going out and trying to buy their own home.
After the whole mortgage has been paid off, then you can continue to rent out your place. Every monthly payment will then go to you and it becomes a profit for you.
Since you do not have any more mortgage payments to make, all the money collected afterwards will go right into your bank account for you to decide on how to spend it. A lot of times if the property is in a good area and kept up really nice, then it will appreciate over time.
So if you paid two hundred thousand for the home, after twenty years it might have appreciated in value and is now worth three hundred thousand. You can sell it when it hits a high point in value and make one hundred thousand dollars.
Or you can continue to hold onto it and rent it out to other people to keep making money month by month. It is completely your choice and may be worth it to hang onto it for a while longer.
If you decide to manage a rental property, you should realize that it takes time and effort to keep it up. You have to maintain your investment so that the value of the property stays high and keep an eye on your tenants so that they do not damage your home.
This is why it is important to come up with a good application that allows you to see the potential tenants history including any debt that they might have, how much they make every year, how many dependents they have, and if they have a good credit history so that way you are almost positive that they will be able to make the monthly payments in full every time. You need to also come up with a good contract that covers you in every area so that nothing gets damaged and you will not be responsible for fixing it.
by: Jack Landry
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