Investors are buying!

Yes, that is right. I just helped an investor buy a house as a rental. He paid $170,000 for a newer town house in Bowmanville. He put 20% down from his line of credit at 3.5% with an interest only payment of about $100 per month. (He could have bought with 5% down but had the line credit sitting there at 3.5% so why not use it). He obtained a mortgage for the balance which was $136,000 @ 4.75% over 25 years and payments of $771 per month. The taxes on the property are $2260 per year or $188 per month. His TOTAL EXPENSES PER MONTH $1059.

He put an ad on Kijiji for a tenant @ $1200 per month and got 25 responses. He is in the process of selecting the right tenant. That is a POSITIVE CASH FLOW of $150 per month for $0.00 investment.

The positive cash flow sounds good but the real gem is the equity that he is building up as the tenants are paying his mortgage. In 25 years time he will own this home free and clear having invested $0 of his money. If he decides to put the $150 a month income back into the mortgage he would have paid for the house in about 18 years. This is a $170,000 return on $0.00 investment and we have not even considered how much the house could be worth in 25 years time.

If there are too many numbers to digest you can attend one of our Wealth Building Seminars to get more details. The next one is on Wednesday March 4th. Call us to register or click here to register over the Web.

-- Masood Vatandoust