After a series of mishaps with the lender, the lawyer and the broker, I finally got the mortgage arrangement I wanted. I extended my amortization by about 10 years and was able to pocket a cool sum while paying the same P&I each month.
On top of that, my home value went up and I was able to roll the additional equity as a line of credit.
Now I've some investment money at a pretty good rate of < 5%. The next thing is to find investment opportunities where I could comfortably beat 5% as a return on investment. I was toying with the idea of real estate for the longest time but eventually opted not to do real estate for 2 main reasons.
- It didn't leave me much cash for a rainy day.
- Based on my calculations, the rental ROI for a downtown property only allowed me to break even.
100% * (Expected Monthly Rent * 11 / Price You Paid for the Property) - Expected Annual Expenses
Expected Monthly Rent is how much you can reasonably charge for your property in order to minimize your likelihood of vacancy. You multiply by 11 because chances are if you get a vacancy, it'll take you 1 month to fill it.
Price You Paid for the Property is exactly that.
Expected Annual Expenses should include things like repairs, maintenance fees, utilities, taxes and cost of borrowing.
I ended up investing half the sum I had in stocks and was able to break even within a couple of months.
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