How to Become a Millionaire and Get Your House to Send You Monthly Checks – Insider Tip Number 14, Part A

In this Insider Tip, we’ll talk about …

a.) Buy, but never sell. Tenant mortgage pre-payment. How to make money, even if houses go down in value.

The Most Widely-Used and Proven Wealth-Building Real Estate Strategy:

Part A: Buy and Never Sell: You have an opportunity to get involved with a vehicle that has made many, many millionaires in this country. If you can hang onto it and never sell … this Fairfax VA home can be paid off for you by a tenant, and that tenant can actually pay you extra money over the amount of the monthly mortgage payment.

Then, you can apply this money toward mortgage principal prepayment, as we talked about in a prior strategy, remember?

Tenants’ rents can cover all the expenses and maintenance. The tenant can cover extra mortgage principal prepayment and actually pay this house off for you in 10 to 15 years!

And now you have a house that you didn’t pay for — someone else literally bought it for you. Plus you get extra tax breaks as a landlord that you don’t get as a homeowner. And, after it’s paid off, all the rent coming in is pure monthly, free cash flow to you.

This is how most of the millionaires have made their money in real estate. This is how most investors try to get involved. The difference is, as an investor, they have to put up a much, much larger down payment than you do as a homeowner.

You, as a homeowner, are actually being offered a situation where you can buy a house, with low money down – AND, you can have an asset that someone else will pay off for you! You can continue to get tax breaks and cash coming in, after it’s paid off. It’s a no brainer, obviously.

Now there are some downsides. You have to maintain the house. But if you write your leases properly and you have the necessary ‘home warranties’ (another Insider trick you can learn about at the Webinar) in place and adequate insurance … you don’t have to worry about extra major expenses.

And again, this is another whole topic, another whole seminar that I teach. But, this has proven, over time, to be one of the most tried and true ways of getting wealthy in this country.

How to make money even if your house goes DOWN in VALUE … No Need to Rely on Housing Appreciation …

You can even make money if Real Estate goes down in value and here’s how:

If you bought a Fairfax VA home for sale for $200,000.00, and you had a tenant, paying a market average rent of $1500.00 a month, which is paying off your mortgage for you every month – then, by the end of the mortgage (which could be just 10-15 years), you’ll have an asset that is owned free and clear of any debt … if you applied the ‘principal prepayment strategy.’ (Re-read your first Inside secret on this strategy to refresh your memory!)

Let’s assume you’ll be making the extra principal prepayments because you’ll be getting a little extra in rent – allowing you to have the house paid off in 15 years.

OK, now let’s say at the end of 15 years, the $200,000.00 house you bought has gone down in value to $150,000.00. You haven’t lost any money because you didn’t pay any money …

Because you only had to come up with the down payment, which was maybe $10,000, or perhaps only $5,000, when you first bought the house.

In our example, let’s use a hypothetical $10,000.00 as the down payment you used when you bought this $200,000.00 house. You now have a $150,000.00 house paid off, owned free and clear.

You’ve turned $10,000.00 down payment into a $150,000.00 asset that is owned free and clear, because someone else (the Lender) lent you the money to buy it and then someone else (the Tenant), paid off the loan for you. That’s the power of leverage. And that’s the power of how Real Estate makes people very wealthy.

And the icing on the cake? You’ve also got $1,500.00 a month checks coming in every month from continued rent after the property is paid off. So that’s how you can actually make money in real estate when it goes down in value.

Of course, we hope it doesn’t go down in value. We’d like to see it go up and make even more money, but your downside is protected. The house would have to go down to a ridiculously low value of $10,000.00 — for you to risk not being able to recoup your original $10,000.00 down payment.

That’s pretty ridiculous, and I don’t see that happening in the future.

In my next blog post, I will discuss Part B, equity re-utilization – a Multi-millionaire strategy.

Thanks for reading this,

Thierry Roche.

Thierry is a Real Estate Agent at RE/MAX Premier, and Host of Talk Radio’s “Inside Real Estate”

Phone: (703) 322-0600

Thierry@ThierryRoche.com

Copyright 2010 Inside Real Estate, LLC. All Rights Reserved.

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