I often talk about the ideal business model. This is mostly due to the fact that I plan to make my living from income that I can turn into passive income instead of working the 9-to-5 my whole life. I know it sounds crazy to many, but it seems like it would offer me a lot of benefits and will be hard to turn down. As a result of being motivated, I know that I have to keep my expenses low in order to maximize my return. As I have talked about, one of the benefits of blogging is the low overhead costs. This allows for a smaller risk and more net income.
Minimizing Expenses in Real Estate
This model of limiting your expenses also applies to real estate investing. If you are trying to keep your monthly payments to a minimum, you should consider placing a larger down payment down upon signing or find the lowest interest rate available. Any mortgage calculator will tell you that the higher down payment you have, the lower monthly payment you will have. While it increases your initial investment, it may just offer you more breathing room and an immediate positive cash flow for your investment.
Having small upfront expenses is an attractive aspect of running a business. It essentially allows you to establish yourself while your business is picking up. While you may be tempted to consider interest only mortgages in an effort to keep the initial payments lower, it only delays the inevitable and puts your investment at risk if you are unable to pay the remaining amount when the interest only mortgage comes due.
While you do want to be conscious of your immediate expenses, you need to be aware of the long term results as well. Investors also need to think long term if they want to go anywhere or make any significant profit. I am working on minimizing my expenses now while also keeping long term goals in mind. Long-term growth may require you to spend some extra money in order to grow your business, but don’t let it get out of hand. Remember that in order to maximize your return on your investment, you need to keep your expenses as a minimum.
This post was provided by Emortgage Calculator.