Don’t Work for Your Property, Make it Work for You
Homeowners have been underwater on their mortgages since the housing collapse in 2008 and 2009. During 2014, and even prior, many homeowners have seen their properties finally pull out of negative equity into some positive profit. With more equity accumulating each day, make the property work for you for even more wealth.
Refinance When Appropriate
According to Les Christie with CNN Money, “millions of homeowners could save big” just by choosing a refinancing option when the time is right. With today’s positive equity, the time is definitely here to explore your options. When you hold a large interest rate, such as 8 percent, your monthly mortgage is substantially high. By halving your interest rate to 4 percent, you see several hundred dollars shaved off each month’s payment. 2015’s 4 percent rate is holding relatively steady.
photo 401(K) 2012 via Flickr
Become a Landlord
When you have a relatively low mortgage payment, the going rental rate is often higher than that amount, depending on the neighborhood. Consider your property as rental income. According to Green Residential, inspect a property thoroughly and agree on a rental payment with a new tenant. Both parties protect themselves from costs associated with property damages with this process. In many cases, you’ll pay the mortgage payment with the rent money, leaving some profit leftover. Put some of these funds back into the home to cover any wear-and-tear items when the tenants leave. From carpets to interior paint, the home will need some improvements with even the best tenants.
Update Amenities Periodically
Keep your property competitive with others in the neighborhood to maintain a strong resale value. Update plumbing fixtures and exterior lighting, for instance. Solar installations are smart options with current government incentives making them affordable for many homeowners. Stay abreast of any potential major system updates, including water heater replacement or air conditioning repairs. You want any tenants to have strong household systems to keep them as loyal renters. If you have a poor reputation in town with tenants, your rental income can suffer and lead to an empty home at some point. Be fair with any charges to damaged amenities as well, depending on the tenants’ length of time at the home.
Invest in More Property
As you pay down the mortgage with tenant rental funds and your own income, consider an investment in another property. Wealth is only earned through strategic spending and smart investing. Purchase a fixer-upper home at the current low interest rates to take advantage of a low sale price. Slowly repair key items and rent it out. Whether you own condominiums or single-family homes, people are always looking for a beautiful rental to call their own. With some luck, you could have continuous tenants for years. Use any extra money to invest in current and new properties to keep your wealth steadily growing.
Stay on top of mortgage payments and treat any renting tenants with respect. With responsible care of the property and tenants, you’ll see a beautiful home emerge with ample equity to bolster your wealth. Owning property is a viable option that can lead you to a comfortable retirement.
Guest Author: Lolita Di
