Fairfax real estate, and real estate in general, usually appreciates over time, increasing in value as the years go by. However, you don’t have to rely on housing appreciation to earn with your investment. You can make money even as real estate values are going down.
Say you bought a Fairfax VA home for sale for $200,000. You can get a tenant to pay a market average of $1,500 per month to cover the monthly mortgage payments of the property. At the end of the mortgage, which could take only 10 to 15 years, you’ll get an asset clear of debt. Why 10 to 15 years when most standard loans take 30 years to pay off? Simple: you apply the mortgage principal pre-payment strategy!
Let’s follow this example through to the end and see what you end up with. Assume you’ll be making extra principal pre-payments from the extra you can get from the rent. This will let you pay off the property in 15 years. Now, say market values go down sometime during those 15 years and the $200,000 home you bought went down in value to $150,000. Did you actually lose $50,000?
No. You didn’t lose money because you didn’t pay any. To buy the house, you only had to invest the down payment, which could be as low as $5,000 to $10,000. Let’s assume you did pay $10,000 down. When the formerly $200,000 property is paid off, you end up with a $150,000 property clear and free of debt.
You made your $10,000 investment turn into a $150,000 asset owned free and clear because you got someone else (the Lender) to lend you the money to buy it, and then had another person (the Tenant) pay the loan for you. That’s how leveraging the power of real estate can make you wealthy.
That’s not all though, since after the mortgage is paid off, you still get monthly checks worth $1,500 from the continuous rent. Though market values went down, you were still able to make money from Fairfax real estate. It would have to go lower than the $10,000 you paid for you to lose any money at all – which is ridiculous. And remember we’re assuming real estate values go down. What more if values just continued to appreciate?
Thierry is a Real Estate Agent at RE/MAX Premier, and Host of Talk Radio’s, “Inside Real Estate”
Thierry & his team Guarantee a $25,000 minimum savings for Northern VA Homebuyersby applying his unique insider techniques & strategies that he discovered throughout 8 years of exclusive Radio Interviews & Insider Access to wealthy Real Estate Insiders, Investors & Top Industry experts.
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