D
DeletedUser394
Guest
I was reading The Richest Man in Babylon. It has nothing to do with real estate, but something occured to me. Real estate is an easy and efficient way to build net worth without sacrificing too much capital.
Let me get this straight. (I rounded the numbers for simplicities sake);
I take out a $75,000 loan with a $25,000 down payment for a duplex. The total of both rents is $1,500, but there's a problem...the payment to cover the loan is $1,600. So every month I lose $100...or am I profitable?
Here's why;
1) My original investment was 25K.
2) Total rent from one year is 18K (10 x 1500).
3) So wouldn't my ROI become $16,800? (18K - 1.2K)
4) An ROI of 67% (assuming you count net worth as a return) is a pretty awesome deal for having to spend only an extra $1,200 a year.
*I know there are more variables, but I just want to discuss the fundamentals.
Wouldn't it be good to find a few co-signers (I have a few I started networking with), buy a couple of properties, use the equity as collateral from the properties to buy new properties (assuming I won't over-leverage myself and my partners).
After that I could hold them for a few years, sell my share of the building(s), take the cash and reinvest solo or with partners in bigger properties.
This is fascinating to me. What I'm basically getting at is this;
My business(es) will cover the small losses per month in rent (or not if there are some properties that are totally positive.
So doesn't this make sense (I confused myself).:smx6:
Thanks
Let me get this straight. (I rounded the numbers for simplicities sake);
I take out a $75,000 loan with a $25,000 down payment for a duplex. The total of both rents is $1,500, but there's a problem...the payment to cover the loan is $1,600. So every month I lose $100...or am I profitable?
Here's why;
1) My original investment was 25K.
2) Total rent from one year is 18K (10 x 1500).
3) So wouldn't my ROI become $16,800? (18K - 1.2K)
4) An ROI of 67% (assuming you count net worth as a return) is a pretty awesome deal for having to spend only an extra $1,200 a year.
*I know there are more variables, but I just want to discuss the fundamentals.
Wouldn't it be good to find a few co-signers (I have a few I started networking with), buy a couple of properties, use the equity as collateral from the properties to buy new properties (assuming I won't over-leverage myself and my partners).
After that I could hold them for a few years, sell my share of the building(s), take the cash and reinvest solo or with partners in bigger properties.
This is fascinating to me. What I'm basically getting at is this;
My business(es) will cover the small losses per month in rent (or not if there are some properties that are totally positive.
So doesn't this make sense (I confused myself).:smx6:
Thanks

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