House-hacking refers to buying a multifamily property on an owner-occupied mortgage, living in one unit and renting the others. If you're thinking about becoming a rental mogul, starting early is an advantage. Not only will you have longer to accumulate a larger portfolio, you can increase the leverage on the first acquisitions if they are owner-occupied. Leverage is the use of other people's money to finance an investment. The higher the loan-to-value, the greater the leverage which can increase the yield. A $200,000 rental property with an 80% LTV at 4.5% for 30 years producing a 16.88% before-tax rate of return would increase to a 23% return on investment by increasing the mortgage to 90%. A typical down payment on an investor property in today's market is 20-25% but, in some cases, a higher loan-to-value is possible. Owner-occupied, multi-unit properties, two to four units, allow a borrower to occupy one of the units and rent the others out. ...
Comments
Post a Comment